The revised fixed rate method for work-from-home expenses for the FY2023
For individuals who are also working from home, the calculation of the work-from-home expenses of Income-tax return has various methods of calculations available. And before 1st July 2022, there were 3 methods: The shortcut method, the fixed rate method, and the actual method. However, starting 1 July 2022 the shortcut method has been abolished and the fixed rate method has been revised.
The revised fixed rate method:
Increases the rate per hour from 52 cents to 67 cents.
Changes the rate cover.
Changes the records to maintain.
It has removed the requirement to have a home office set aside for work.
The previous fixed rate method covers the taxpayer’s, work-related internet and mobile and home phone costs, electricity, gas, stationeries, computer consumables, home office cleaning expenses, and declines in the value of furniture and furnishings, and the decline in the value of computers and similar devices.
While the revised fixed rate method, still covers the same work-related running cost and other expenses in the old fixed rate method except for the home office cleaning expenses and the decline in the value of computers and similar devices which are to be calculated under the actual method. Note that the requirement to have a home office set aside is removed.
The revised fixed rate has now more restrictions than the old fixed rate method. It requires a taxpayer to maintain a record which is a representative of a total number of hours worked from home during the period from 1 July 2022 to 28 Feb 2023 and to keep a record of the total number of hours worked from 1 March 2023 to 30 June 2023. But for the year ending 30 June 2024, the total number of hours worked should be kept for the entire year. An individual also needs to maintain at least one monthly and quarterly bill.
For the previous fixed rate including the shortcut method, estimates were acceptable but beginning 1 July 2023 for the revised fixed rate method and short-cut method, the ATO requires proof that an individual has incurred the running cost causing stricter record-keeping requirements.
A step-by-step guide is provided on the ATO website. But you can always contact us when you need more guidance with regard to this method.
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Yan (Jenny) Qi CA
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Tel. no. 0403 050 779