Since 2022, over a quarter of Australian adults have worked from home (WFH). Although a precautionary measure during the COVID-19 pandemic, this flexible work approach works well for many companies and sole traders. WFH patterns help sustain a healthy work-life balance and empower people to create an environment where they feel most productive.
The Australian Taxation Office responded to this shift with changes in the fixed rate method, offering further support to people working from home.
Read on as we summarise everything you need to know about the current fixed rate method and evaluate how it compares to the terms in previous years.
What Is the New Fixed Rate Method?
The fixed-rate method is a deductible expense for every hour you work at home. Summarise the key points below:
- On 16th February 2023, the ATO introduced changes to the fixed rate method.
- Changes apply to expenses from 1st July 2022 (2022/23 tax year).
- The claimable rate increases to 0.67 cents per hour.
6 Changes Under the New Fixed Rate Method
Changes announced in 2023 apply to expenses incurred from 1st July 2022. Payments made before 1st July 2022 must follow the prior terms. We’ve constructed a full overview to streamline tax reporting:
|Terms as of 2023’s Announcement
|Terms Before the Announcement
|0.67 cents per hour worked at home.
|$0.52 cents per hour
|Energy bills (electricity and gas for lighting, heating and cooling)
Cellular expenses (mobile and landline)
Stationary and computer add-ons (paper, ink, and laminate)
Internet and connectivity (Wi-Fi)
|Depreciating assets (computers, laptops, or furniture)
Cleaning and maintenance costs
Utility bills (electricity and gas)
|No dedicated office space is required–you can work from other rooms in your home
|Dedicated office space calculated per square foot
|Accurate records of the hours worked from home–timesheets, schedules, or rotas (including hours worked across other locations)
|Accurate WFH hours or logbook methods
|Immediate deductible on items worth $300 or less purchased in the same year (keyboards, lamps, or wires)
|Depreciation is included in regular rate expenses
|Logged records and receipts
|Receipts and invoices for the expenses made on covered costs and assets required to work from home (such as a computer monitor)
Calculations of expenses split between personal use and professional obligations
|Receipts proving the purchase of electricity and gas used to heat, cool, or light dedicated workspace
Receipts on cleaning costs and depreciating assets, like computer equipment
Important: You can’t double-claim the expenses listed. You can only deduct the costs above as separate expenses or via the fixed rate method.
Learn How These Changes Will Affect You
Are you a sole trader operating from home? Or perhaps a small business owner fostering a fully or partially remote team? Contact us to make the most of the deductibles open to you.
Our skilled team will share invaluable strategic business advice on handling taxes and supporting your long-term financial objectives.
Discover more changes in 2023: New Changes to HECS-HELP Debt Threshold