Working from home – Things you must know if you claim Home Office Expense in your tax return

In response to the global COVID-19 pandemic, businesses worldwide swiftly embraced remote work as a means to safeguard both their operations and their valued employees. Did you know that amidst this shift, there's an opportunity to leverage your home office expenses to reduce your tax?

Key Change in 2022-2023

There have been significant changes to the deduction requirements for claiming working from home (WFH) expenses, effective from 1st July 2022. It is crucial to be aware of these changes when considering the inclusion of home office expenses in your tax return.
The key modifications are as follows:

• Removal of Dedicated Home Office Requirement: Previously, it was necessary to have a dedicated home office space to claim WFH expenses. However, this requirement has been waived, allowing individuals to claim expenses for working from any part of their home.

• Increased Cents per WFH Hour: The rate at which WFH expenses can be claimed per hour has been raised from 52 cents to 67 cents. This adjustment aims to better reflect the costs associated with working from home.

• Full Year WFH Logbook Requirement: If you choose to use the Fixed Rate Method (cents per WFH method) for calculating your WFH expenses, it is now mandatory to maintain a comprehensive logbook covering the entire fiscal year. Estimates are no longer acceptable as proof of total WFH hours.

The Australian Taxation Office (ATO) classifies Home Office expenses into two categories: Home Office Running Expenses and Home Office Occupancy Costs. Taking into account the revised deduction requirements mentioned above, we have summarised the key features of each category below:

	Home Office Running Expenses	Home Office Occupancy Cost
What’s included	Electricity Gas Internet Mobile Stationery Depreciation of Office Furniture (e.g. Desk) Depreciation of Office Equipment (e.g. Laptop)	Mortgage interest Rent Council rates Water rates Body Corporates Land taxes House insurance premiums
Eligibility	You work at home to perform work-related tasks	Your employer does not provide you a space to work and you have to work from home as per the contract; AND The home office is exclusively used for work purposes.  i.e. you only do work related tasks when you stay in that office.  No gaming, Netflix etc.
How to calculate	Either: Option A – Actual expenses Actual expenses multiplied by work related %. Option B – Fixed Rate Method (aka Cents per hour method) Total working from home hours multiplied by 67 cents; expenses covered by this method include: Electricity Gas Mobile Stationery Expenses that are not covered by this method can be claimed under Actual expenses method.	Actual expenses multiplied by floor area %
Evidence required	Depending on method you use… Option A – Actual expenses Invoices and receipts Records to proof/reasonably estimate your work related % Option B – Cents per hour method FULL YEAR home office logbook	Bank statements, Invoices, and receipts to support your claim. Floor Plan

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Get in touch with our team today to discover how you can maximise your tax savings by strategically claiming your working from home expenses.  We will ensure that you comply with the ATO regulations while maximise your eligible claims.