The ATO has recently released draft Practical Compliance Guide PCG 2022/D4 outlining a new 67 cents per hour rate from 1 July 2022 for claiming working from home expenses. The 67 cents per hour rate replaces the previous pandemic shortcut method of 80 cents per hour which applies up to 30 June 2022 and the hybrid method rate of 52 cents per hour.
Key points:
- Taxpayers can claim a deduction for 67 cents for every hour they genuinely work from home. Alternatively, they can claim a deduction under the actual cost method for actual expenses incurred in working from home, although the recordkeeping obligations are much higher under the actual cost method.
- Taxpayers are no longer able to claim the 80 cents per hour deduction (short-cut) method available before 1 July 2022, or the 52 cents per hour deduction method.
- The 67 cents per hour deduction covers the following expenses that have been incurred and not reimbursed:
- energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while working from home
- internet expenses
- mobile and/or home telephone expenses
- stationery and computer consumables.
- The 67 cent per hour method does not include depreciation of any assets in the home used for work purposes, such as a personal computer or similar electronic device, a desk and office chair. Taxpayers will need to do a separate tax depreciation calculation if they wish to also claim a deduction for such assets and keep separate records of work or business use (g. a four-week representative usage record which can be applied to the entire year). .
- Taxpayers are not required to have a separate home office or dedicated work area set aside in their home to claim the 67 cents per hour deduction. If more than one taxpayer in the household is working from home at the same time, each taxpayer will be able to rely on this Guideline only if each of those taxpayers meets all the criteria for this
Recordkeeping requirements
There are tighter substantiation rules to comply with under either the 67 cent per hour method. But because of the delay in issuing the latest ATO guidance, substantiating the 67 cents per hour deduction for the current (2022/23) income year is split into two periods, requiring taxpayers to keep:
- a record which is representative of the total number of hours worked from home during the period from 1 July 2022 to 31 December 2022; and
- a record of the total number of “actual” hours you worked from home for the period 1 March 2023 onwards.
From 1 March 2023, taxpayers must keep a day-by-day, even hour-by-hour record of time spent working from home. Acceptable records include timesheets, rosters, a diary or similar document. The ATO will no longer accept an estimate for the entire income year or an estimate based on the number of hours worked from home during a particular period (such as a 4 week diary) which is applied to the rest of the income year.
Adults paying board at home
The ATO makes it clear in the PCG that adults living at home and paying board cannot make a claim using the 67 cents per hour rate. In this situation, the parents are actually incurring the costs, but are not the taxpayers working from home.
The payment of board is viewed as a private arrangement between the parents and the adult child.
