Taxpayers claiming work at home (WFH) bills at tax time face massive adjustments this yr as Australia strikes away from pandemic insurance policies.
A COVID-era “shortcut” that simplified tax returns by permitting employees to lump all distant work prices into one 80 cent an hour fee has been axed.
As an alternative, the Australian Taxation Workplace (ATO) this week unveiled a revised “mounted fee technique” permitting WFH bills (like payments and stationary) to be included in a 67 cent hourly fee – up from 52 cents.
In contrast to the shortcut, nonetheless, depreciation of workplace gear will now must be calculated individually and employees can even be required to maintain real-time data of their WFH hours in each day dairies or timesheets.
ATO assistant commissioner Tim Loh stated individuals who haven’t got actual time data but for this yr can get away with utilizing a four-week abstract of hours till February 28, underneath a transition association.
However from March 1, the ATO would require extra exact data, he stated.
“You could work out the variety of hours you labored from residence and multiply that by 67 cents,” Mr Loh instructed The New Each day concerning the revised technique.
One other change is {that a} devoted residence workplace is now not required to make use of the fixed-rate technique. An present “precise prices” technique can also be nonetheless obtainable for employees preferring to calculate their returns in additional element.
Do business from home tax adjustments
Mr Loh stated the distant work tax adjustments should not be too onerous for most individuals, significantly those that had been already retaining good data of hours they labored from residence throughout COVID.
He stated individuals who work remotely two days per week on a full-time schedule may anticipate to get a deduction of round $500 if claiming working prices like phone, web and vitality payments underneath the adjustments.
The fixed-rate technique can be utilized to lump collectively bills akin to:
- Vitality, cellphone and web payments.
- Workplace consumables akin to stationary and printer ink.
However in contrast to the COVID-era shortcut, employees will now must calculate depreciation on their residence workplace gear and declare it individually.
These claims can embrace the next varieties of residence workplace prices:
- Decline within the worth of property used whereas working from residence, akin to computer systems and workplace furnishings.
- Prices for repairing and sustaining these residence workplace property.
- Prices related to cleansing a “devoted residence workplace”.
“The most effective factor I’d counsel is to take a look at the ATO web site. Now we have calculators that may enable you work out the depreciation of these property,” Mr Loh stated.
Those that used the shortcut throughout COVID can solely declare depreciation on residence workplace gear for the 2022-23 yr.
Report retaining is important
Mr Loh stated a very powerful factor employees can do to arrange for these tax time adjustments is to maintain strong data of the hours they work at home every day and any bills they incur.
The ATO will this yr be asking employees who’re claiming bills like their cellphone, electrical energy or web prices to offer not less than one invoice they obtained throughout 2022-23, Mr Loh stated.
“We’re all about data, no data equals no deduction. It is actually essential [that] individuals have that,” he stated.
CPA Australia senior supervisor of tax coverage Elinor Kasapidis warned the record-keeping guidelines underneath the revised fixed-rate technique are extra onerous than the shortcut technique was throughout the pandemic years.
“Australians might want to maintain an ongoing diary for every day of the yr they work at home from March onwards,” she stated.
“A four-week diary consultant of the yr is not going to chop it. Additionally they must maintain some data about their bills incurred whereas working from residence, akin to copies of utility payments.”
Mr Loh stated that taxpayers can maintain a document of their distant work hours digitally too, and that employers might help with offering data of work at home rosters, if wanted.
