How to claim deductions for home office expenses?

Working from home is the new normal, but a new normal also demands some changes. If you work from the comfort of your home, you might be able to claim some of your home expenses. Wondering how to do that?

Let’s discuss whether you can claim home expenses, how you can do so, and which costs you can and cannot claim.

Eligibility Criteria 

Before hopping on the claiming home expenses train, you need to determine if you’re eligible. Let’s look at how you can do it:

• The ATO requires you to have incurred expenses directly related to your work. So, attending normal work calls or responding to a few emails from your home can’t be counted in your home expense.
• You must also include additional expenses incurred from working from home.
• The revised criteria don’t need you to have a dedicated home office to implement the fixed rate method.
• Maintaining a proper record of your expenses and keeping all the documentation is essential. It should include any invoices or receipts that you can use as evidence. Having proper records gives you the flexibility to choose the best method for a tax deduction too.
• From 1^st July 2022 to 28^th February 2023, the ATO will accept records that represent the total number of hours worked from home, such as a 4-week diary.
• Taxpayers will need to record the total number of hours worked from home starting from 1^st March 2023.
• You cant claim items like tea, milk, or coffee, even if your office provided them.

Once you’ve determined you can claim work-from-home expenses, you need to choose a suitable method to calculate your expenses. These are the fixed-rate method and the actual cost method.

The method you choose depends on your specific requirements and circumstances. Let’s check out their advantages and disadvantages below.

How to Claim Tax Deductions 

Let’s look at some methods to help you choose the right way to claim your home office expenses:

1. Fixed-rate Method 

The fixed-rate method helps you claim tax deductions for expenses and has been revised for the fiscal year 2022-23. The previous rate of 52 cents per hour has increased to 67 cents per hour for running utility expenses like electricity and gas, a decline in furniture value, and phone and internet expenses.

You can also claim these things separately:

• A decline in the value of things like computers and furniture
• Maintenance and repairs of these assets
• Costs for cleaning a dedicated home office

All you need to do is keep a diary and note when you start work each day and finish off. You also need to log any breaks.

2. Actual Cost Method

The actual cost method didn’t undergo any alterations.

The actual cost method lets you claim tax deductions on your expenses when working from home. These include electricity, internet, gas, and phone bills.

You can only claim the expenses that are work-related, not for personal use. To prove your expenses are only work-related, keeping accurate records, including bills and invoices, is important.

The actual cost method is beneficial if you have high work-related expenses or work from home for a long while.

Please contact Accounting Tax Solutions today on 07 5559 1200 or email us at info@accountingtaxsolutions.com.au,  alternatively you can visit our office located at Shop 31, 3 Swan Lane, Mudgeeraba Market Shopping Centre, QLD 4213. We are located in the Woolworths Shopping Centre,  Mudgeeraba Market Shopping Centre.  Our office is located on 3 Swan Lane car park entrance,  between Coastal Dental upstairs from us and Gumnut bakery down the stairs.