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ATO ends special COVID working-from-home tax deduction

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A significant change in tax deduction rules for Australians working from home has been reported by Tom McIlroy, a political reporter, on Feb 16, 2023. The previous Tax Office rules allowed taxpayers to claim a fixed-rate deduction of 52¢ per hour or the actual cost of technology and office equipment. However, under the new regulations, workers can claim either the actual cost or the increased fixed rate of 67¢ per work hour. The revised fixed rate now covers expenses such as energy, phone, and internet, stationery, and computer consumables. According to Assistant ATO commissioner Tim Loh, eligibility for claiming working-from-home expenses requires fulfilling employment duties at home, not just carrying out minor tasks, such as checking emails or taking calls.“Also, you must incur additional expenses as a result of working from home.“Assets and equipment that typically give taxpayers a bigger deduction, such as technological items and office furniture, are not included in the revised rate and need to be claimed separately.”The revised fixed-rate method applies from July 1, 2022, and can be used when taxpayers assess deductions for their 2022–23 income tax returns.CPA Australia senior manager for tax policy Elinor Kasapidis said 2 million Australians claimed deductions for working-from-home expenses before the pandemic. The figure soared to 5 million during COVID-19 restrictions.“The shortcut method that was used by millions of people over the last few years to make their deductions is no longer available,” she said.“Some Australians will still be under the impression they can claim a work-from-home deduction in the same way as they did during the height of the pandemic.

“The ATO has a big job ahead to ensure Australians are aware of their obligations,” she said.Chartered Accountants Australia and New Zealand tax leader Michael Croker said the decline in value of any work-related depreciating assets used at home now needs to be separately calculated, along with any other expenses not covered by the rate per hour method.“The big mistake some clients make is to do a back of the envelope per hour deduction calculation,” he said.“That’s not acceptable to the ATO, which expects individuals to keep records of the time spent working from home and the household running expenses.

“You can keep track of hours worked from home by retaining records such as timesheets, rosters, computer log-in times, time-tracking apps or an old-fashioned diary.”

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