The ATO’s shortcut method for calculating work from home expenses was introduced in 2020 during the pandemic. Now Australians who continue to work from home after June 2022 are being warned to keep accurate records of their working from home expenses as the shortcut method is coming to an end.

For the 2022-23 financial year, taxpayers will have to use either the fixed rate method or the actual cost method to claim work from home expenses.

Shortcut Method

The shortcut method, which can still be used for the 2021-22 tax return, allows taxpayers to claim 80 cents for each hour that they have worked from home.

It only requires the taxpayer to keep a record of the hours they have worked from home and covers:

• Phone
• Internet
• Decline in value of equipment and furniture
• Electricity and gas

Fixed Rate Method

Taxpayers can claim 52 cents for each hour they have worked from home using the fixed rate method. This rate includes the decline in value of home office furniture, electricity and gas, and cleaning. All that needs to be done is keep a diary of your hours worked.

What makes this different to the shortcut method is that you can make separate claims for the work-related proportion of home internet, mobile phone, stationery and printer ink.

Actual Cost Method

Here, the taxpayer is allowed to claim a deduction for the actual expenses they incur as a result of working from home. This includes asset depreciation, cleaning expenses, electricity and gas, phone and internet and computer consumables, which are calculated individually and require receipts and diaries for substantiation.

What to do from July

It is vital to start keeping records from the start of the 2023 financial year. You will need to prove the work/personal split so record keeping in real time will make this easier.

We are able to help you determine which method would best suit you, by contacting us.