The Australian Taxation Office (ATO) has updated its Practical Compliance Guideline 2023/1, increasing the fixed rate for work-from-home expenses to 70 cents per hour. This change will apply from the 2024–25 financial year.

This fixed rate method allows individuals working from home to claim a set rate for each hour worked, without needing to calculate specific running costs individually. The 70 cents per hour rate covers a range of household expenses, including:

• Home and mobile internet or data usage
• Mobile and home phone expenses
• Electricity and gas (for heating, cooling, and lighting)
• Stationery and computer consumables

It’s important to note that you cannot claim separate additional deductions for any of these expenses if you choose to use the fixed rate method.

Record-Keeping Requirements

ATO Assistant Commissioner Rob Thomson has reminded taxpayers that to use the fixed rate method, a detailed record of hours worked from home is essential. Acceptable forms of evidence include a timesheet, diary, spreadsheet, or logbook that covers the entire financial year.

Additionally, taxpayers must retain at least one document for each of the running expenses included in the fixed rate. For example, an electricity bill is suitable evidence for utility expenses.

Considering the Actual Cost Method?

For those who prefer to claim based on actual expenses, more comprehensive documentation is required. This includes:

• A record of total hours worked from home, or a representative weekly pattern
• Evidence of each expense claimed (e.g., receipts, bills) showing the supplier, description of goods/services, date paid, and proof of payment