Work From Home and Change in Tax Deductions
- Arnold Shields
- Apr 5, 2023
- 3 min read
Updated: May 16
Working from Home? Here’s How to Maximise Your Tax Deductions
The COVID-19 pandemic permanently changed how many Australians work, with a significant shift towards remote work. If you’re working from home, you might be eligible to claim tax deductions — but only if you understand the current ATO guidelines and record-keeping requirements.
Are You Eligible for Work-from-Home Deductions?
To claim a deduction, you must meet both of the following conditions:
Your work at home must be substantive. Occasional checking of emails doesn’t count. The tasks performed need to be directly related to earning your income.
You must incur additional running costs. These expenses must arise from working at home, not from living at home.
What Expenses Can You Claim?
Eligible deductions fall into three main categories:
1. Running Expenses
Electricity and gas for heating, cooling, and lighting
Internet and mobile phone usage (work portion only)
Office furniture and IT equipment depreciation
2. Depreciation of Equipment
If you’ve bought a computer, chair, or other tools specifically for your home office, you may be able to claim depreciation over time based on work-related use.
3. Occupancy Expenses (Use with Caution)
Rent or mortgage interest
Council rates
Home insurance
Important: Claiming occupancy costs can affect your main residence exemption for Capital Gains Tax (CGT). Always seek professional advice before including these in your return.
Choose the Right Method: Fixed Rate vs Actual Cost
There are two approved ATO methods to calculate your deductions:
1. Revised Fixed Rate Method (67c/hour)
Claim 67 cents per hour for work-related home running costs.
Covers electricity, gas, internet, mobile/landline, and stationery.
Separate deductions can still be claimed for depreciating assets like desks and computers.
Record-keeping requirements:
A log of hours worked from home between 1 July 2022 – 28 February 2023.
From 1 March 2023 onward: keep a daily record of hours worked at home, evidence of bills incurred, and receipts for equipment purchased.
2. Actual Cost Method
Calculate the work-related percentage of each individual expense.
Requires detailed receipts and a four-week representative diary to work out your business-use proportion.
This method can result in a larger deduction if your expenses are high and accurately recorded.
Which Method Should You Use?
Each method has its own pros and cons. The fixed rate method is simpler, but the actual cost method may offer greater deductions, especially if you’ve made significant investments in your home office.
Speak to your accountant to determine which method suits your situation best.
As remote work becomes the norm, it's essential to take advantage of available tax deductions, but only with accurate records and the right strategy. Dolman Bateman can help you make the most of your work-from-home setup and ensure you're compliant with ATO guidelines.
Need help with your work-from-home tax claims?
Contact the team at Dolman Bateman today for expert tax advice tailored to your circumstances.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
