Proposed changes to work from home expense claims

The Commission of Taxation has recently released Draft: Practical Compliance Guideline PCG 2022/D4. This guideline defines a new and revised fixed-rate method for taxpayers to claim deductions incurred from working from home. Given the major uptake in work from home arrangements post-COVID, the legislation of these new rules would result in significant changes to the work from home running expenses individuals are able to claim.

From 1 July 2022, the ATO intends to remove the 52 cents fixed rate and 80 cents shortcut methods of claiming running expenses from working from home, and instead replace them with a bundled-together revised 67 cents fixed rate. Previously, taxpayers were able to compare claims under both methods and select the method which provided the higher deduction; however, from 1 July 2022, this will likely no longer be available.

Calculation

Under the 67 cents fixed rate method, taxpayers can claim as a deduction:

• 67 cents per hour worked from home, which covers electricity, internet, telephone, stationery, and computer consumables, such as ink and paper; and
• The work-related decline in value of office equipment, such as laptops and monitors; and
• The work-related decline in value of office furniture, such as office desks and chairs.

Record Keeping

These proposed new guidelines come with the following added substantiation requirements, including that the taxpayer must:

• keep records showing the total number of hours they worked from home during the income year, such as a timesheet or diary
• keep one document for each additional running expense incurred during the year (i.e. an invoice for each piece of equipment, where depreciation is being claimed for work-related purposes)

The actual method of claiming work from home running expenses, which requires more onerous and time-consuming receipt keeping, will continue to be available as the alternative.

If you have any questions in relation to work from home expense claim methods, please feel free to reach out to Link Advisors, and we can have a chat to see how we can help you to maximise your individual tax concessions.