Working from home comes with numerous business perks, but staying on top of your remote working expenses and understanding your eligibility is essential. In 2023, the Australian Taxation Office announced changes regarding working-from-home deductions to provide a better, more effective taxation method.

In this guide, we’ll detail the changes made this year and how these new home deduction rules can impact you. 

What are The Main Changes? 

If you’ve been working from home for a while, you’ll be aware of the two working-from-home deduction methods you can select; actual cost or fixed rate. The fixed-rate method is the one that changed this tax year, enabling you to claim 67 cents for each hour you work from home instead of the previous 52 cents. 

The ATO said that the changes made to the fixed rate method are occurring to reflect contemporary working-from-home arrangements more effectively. 

You also no longer need a home office or work-from-home space to claim deductions, making remote working tax deductions more accessible to many businesses and self-employed taxpayers. 

What is The Fixed Rate Method, and How Has it Changed? 

If you’re new to working from home taxes, you may wonder what the fixed rate method entails. The fixed rate enables you to claim 67 cents for each working hour completed remotely. Previously, the rate covered the decline in the value of home office furniture, lighting, energy expenses for heating, and the cost of cleaning your dedicated home office.

Now, the revised fixed rate enables you also to claim the following; 

  • Home and mobile phone usage
  • Mobile internet or data
  • Electricity and gas
  • Stationery and computer consumables (ink, paper, etc.). 

Of course, there are a few deductions not included in the fixed rate method that you can still file deductions for, such as using a computer. However, regardless of the method taxpayers use, purchased assets over $300 cannot be fully claimed. Instead, these claims will be made over many years, with the decline and value claimed.

When Did The Change Occur? 

The change began in 2022, so you should be applying the new deductions to your records by now. The ATO is accepting new fixed rate method records that started from the 1st of March, so long as they have been recorded accurately as usual. 

How Do I Record My Finances? 

Record keeping should be pursued gradually to ensure your documents are accurate. With the fixed rate method, you must record all the hours worked remotely throughout the entire income year. Remembering that the ATO won’t accept guesswork and estimates is critical, as accuracy is fundamental.

You can record your finances in several ways, such as timesheets, time logs on official business systems, or more old-schooled diary approaches, so long as you can account for the hours you claim. In addition to your hours, you should keep records of expenses, such as phone and electricity bills, when working remotely. 

Unsure Where to Start With Your Business Bookkeeping? We Can Help 

We understand that keeping business records updated can be challenging when you’re busy. At Advisory One, we are experts in keeping records updated and can advise you on where to begin. Contact us today to learn more.