As from 1 January 2023, the record keeping requirements for working-from-home deductions became more onerous, as the Tax Office revised the (post-COVID times) fixed rate method.
Under the revised method, at a rate of 67 cents/hour, taxpayers need to keep a record of the actual hours worked from home for the entire year (e.g. timesheets, rosters, logs or a diary kept contemporaneously). This is more onerous than the 52 cents/hour method where taxpayers only needed to keep a record to estimate how many hours they worked from home. The ATO will no longer accept estimates, or a 4-week representative diary.
The Tax Office also now require evidence in relation to each of the running expenses. For energy, mobile and/or home telephone and internet expenses, one bill per item needs to be retained. If the bill is not in the taxpayer’s name, additional evidence is needed to prove that the taxpayer incurred the expenditure. For stationery and computer consumables, one receipt needs to be kept for an item purchased.
Given these changes, a claim under the fixed rate method will potentially be lower than previous years, while the compliance obligations are higher. The alternative is the “actual expenses” method, which may give a better tax result however again has onerous record keeping requirements.