What has been changed in the WFH Deduction Australia

Starting from 2022-2023, significant changes will impact the WFH deduction in Australia. These changes will affect employees working from home due to the pandemic and those working remotely long-term. These changes will influence the amount of money that workers can claim for expenses associated with their work-from-home setup.

Exploring the Upcoming Changes

This blog post delves into the upcoming changes to the work-from-home deduction and their implications for individuals who work from home. This is especially important in today’s environment with increased interest rates, rising rental prices, and soaring food costs. Understanding the deductions you’re entitled to is crucial, and as a leading CPA accountant in Inner West Sydney, Belrose Northern Beaches, and Adelaide, WISTAX is here to guide you through these changes. We pride ourselves on being your local accountant, coming directly to you in our mobile office, ensuring your comfort and security as we work together.

Understanding the WFH Deduction

If you work from home, you have the right to claim work-from-home office expenses, and there are three methods for this:

  1. The Actual Cost Method
  2. The Fixed Rate Method
  3. The Shortcut Method

During the COVID-19 pandemic, the Australian government introduced the Shortcut Method, which utilizes 80 cents per hour. It’s user-friendly as you don’t need to prove specific work areas at home to claim. However, choosing the Shortcut Method means forfeiting claims for mobile phone or internet expenses and small depreciation within the work-from-home office deduction.

The Fixed Rate Method, in use for many years, employs 52 cents per hour. This method requires proof of a designated work area and keeping a four-week diary to determine the annual working hours. Unlike the Shortcut Method, you must maintain a detailed log of hours worked, excluding breaks.

Changes in FY2023

From 2022-2023, the Australian Taxation Office (ATO) has eliminated the Shortcut Method and introduced two new methods, the Revised Fixed Rate Method and the Actual Cost Method. The actual expense method remains unchanged.

Revised Fixed Rate Method

The Revised Fixed Rate Method entails:

  • 67 cents per hour worked from home, an increase from 52 cents
  • No requirement for a dedicated home office
  • Eligibility to claim and calculate expenses for gas and electricity, internet and phone usage, consumables for computers, printed materials
  • The ability to separately deduct the work-related decline in value of depreciating assets like office furniture and technology

Small business owners working from home may also use the Revised Fixed Rate Method to calculate their home-related business expenses. If you’re a small business owner in this situation, please consult the leading CPA accountant in Inner West Sydney, Belrose Northern Beaches, and Adelaide for guidance on claiming these work-from-home office expenses.

Qualifications for the WFH Office Expense Deduction

To use the Revised Fixed Rate Method for your 2022-23 tax return, you need to have:

From July 1st, 2022 to February 28th, 2023

  • A representative record of the hours worked from home

From March 1st, 2023 to June 30th, 2023

  • A record of the total hours worked from home
  • Evidence of payments for each expense covered by the Fixed Rate Method
  • Records of any equipment bought for working from home, such as technology or furniture

Claimable Expenses in FY2023

If you intend to use the Revised Fixed Rate Method for your 2022-23 tax return, follow these steps:

From July 1st, 2022 to February 28th, 2023

  • Keep a record reflecting the hours worked from home

From March 1st, 2023 to June 30th, 2023

  • List the total hours worked from home, including an hour count and any expenses related to the Fixed Rate Method
  • Document costs associated with work equipment, such as technology or furniture, both new and used

Contact Us

This financial year, it’s vital to prepare for the significant changes in work-from-home office expenses coming into effect in FY2023. WISTAX specializes in assisting small to medium-sized businesses in improving and saving money in their accounting and tax areas. Please visit www.wistax.com.au for more information. Our professional business development officer will contact you.

All WISTAX today for an initial free 15-minute telephone consultation with John and his team on 1800 841 312 if you want to join our fast growing accounting franchisee business