Working from home – your reporting obligations and what you can claim as a deduction

work from home

We haven’t seen a paradigm shift in Australia’s workforce this significant for many years.

The ability to work from wherever you want to call your office and use the hours in your day to be as productive as you need, is now a real thing! Work-life balance has become much more achievable.

Many Australians are now working with a hybrid model, with specified days at home and in the office, and some are working from home full time. But as Eleanor Roosevelt said, with freedom comes responsibility.

From July 1, 2022, the ATO introduced new guidelines for people working from home. It is important to comply with these new work-from-home rules and regulations, and to report activity to the ATO properly. Or you could risk not being able to claim the expenses that are rightly yours to claim.

Setting up good work-from-home habits sooner than later

If you set up good habits to work from home starting now, you’ll be more organised, productive and have more cash in your pocket later.

In this article, we explain the definition of working from home, reporting obligations and recording expenses. It is important to follow the rules here or you risk having your tax claim rejected by the ATO, and that would put a great big wet blanket over the work-from-home benefits! We don’t want that for our clients so please read carefully and call us if you’re unsure about any of the information below.

What does “Work from Home” mean?

The ATO describes working from home as fulfilling your obligations to your employer for your required duties and doing work that you would normally do at the office. It is not just about occasionally checking emails and taking phone calls.

Working from home can have its drawbacks with distractions and noise. It can take some time to get into a routine. It is helpful to have an office in your home or an area dedicated to your workplace and have a conversation with the family to agree on “no interruption” times to help you stay productive.

Keep records of your time

Working from home requires you to keep records of the time you spend working. What are your daily hours? Do you work from 8am-4pm or from 9am-5pm? Do you have a lunch break?

You must keep a time sheet when you work from home and log the days and hours that you work each day. Once you get into a rhythm, you’ll find this easy to do.

Contact us if you want more information about time sheets. Call us on (03) 9851 6500 or email us at hello@colledges.com.au.

Keep records of your expenses

When you work from home you will have running expenses. You can attribute some of these running expenses to your work and claim a tax deduction for the expenses that are directly incurred as a result of working from home.

These running expenses include:

  • Utilities such as gas and electricity for heating, cooling and using work related tools
  • Stationery and office supplies
  • Home and mobile phone expenses
  • Internet and data expenses
  • The decline in value of depreciating expenses, for example office furniture and computers that are being used for work purposes
  • Repairs and maintenance to any of this equipment that is being used for work purposes
  • If you have a dedicated office space, then you may also be able to claim rent/mortgage expenses and cleaning expenses.

If you are keeping records and time sheets, you are establishing a working pattern, and you will find it much easier to track your work versus your personal expenses. This means you’ll receive an accurate tax deduction from the ATO to cover your work from home expenses.

As of July 1, 2022, the ATO also requires you to choose a method by which you claim your work from home expenses. The two methods are as follows:

  1. The Revised fixed rate method – this allows you to claim 67 cents per hour you work from home for expenses such as data and internet, mobile and home phone usage, electricity and gas, stationery and computer consumables.
  2. The actual cost method – this allows you to claim a deduction for the actual expenses you incur as a result of working from home. For example, data and internet, mobile and home phone usage, electricity and gas, computer consumables (e.g. printer ink), stationery, the decline in value of assets used while working from home, such as computers and office furniture, maintenance and repairs of these items and cleaning (if you have a dedicated home office).

The established working pattern must occur over a period of time to make it acceptable and make claiming easier, ideally between 30 days to 90 days. If this pattern changes, then a new time sheet will need to be created.

An example of an established working pattern is how much you use your mobile phone for work. How many calls per day or hours on the phone are for work and personal? Once you establish a pattern, it makes claiming easier. For example, if 70% of mobile phone use is work and 30% personal, then you simply claim 70% of mobile phone expenses as work related expenses, rather than having to go into the detail of each personal and work call. But this pattern must be established over a minimum of 30 days, and this can only be done by keeping proper records.

The ATO provides a summary in a PDF here:  Working from home deduction (PDF, 777 KB)

Related article: Proof of Purchase – ATO targeting other work-related expenses in 2022

What you can’t claim

You can’t claim a deduction for:

  • Coffee, tea, milk and other general household items, even if your employer provides these at work
  • Items that your employer provides, for example, a laptop or a mobile phone
  • Expenses where your employer reimburses you for the cost such as stationery
  • Costs that relate to your children’s education, for example, iPads and desks, and subscriptions for online learning.

Call us for help setting up good work-at-home habits

The Colledges team is here to help. Please give us a call on (03) 9851 6500 and we’ll help you establish good working habits at home so that you’re more productive each day and organised at tax time.

Please note that the information above is general information and everyone’s circumstances are different. If you would like more information, it’s best to talk to us here at Colledges. We’ll help you set up your work/home rhythm and claim everything you are entitled to accurately so that you’re not missing out on any entitlements.

Come and experience the Colledges Advantage for yourself.