Home » Tax time is fast approaching and the ATO has a warning to those with work-from-home claims

Tax time is fast approaching and the ATO has a warning to those with work-from-home claims

Australians are being warned this tax time not to double dip on working-from-home claims, make sure they have detailed records of expenses and not to lodge their tax returns too early.

Last financial year, almost 9 million Australians claimed about $24.5 billion worth of work-related expenses (as of March 31), many relating to working from home.

The average claim made by taxpayers was about $3,000.

Assistant Commissioner Rob Thomson says more than 5 million Australians claimed working-from-home expenses last financial year, but some mixed up the methods they used to make claims that essentially resorted to double dipping.

Rob Thomson is warning people not to “double dip” on tax deductions.(ABC News: Nassim Khadem)

He says there are two different methods for claiming: the fixed rate method and the actual cost method.

What’s the fixed rate method for work-from-home claims and what are its limits?

The fixed rate method allows people to claim a fixed amount of 67 cents per hour for every hour they work from home.

It doesn’t require you to apportion expenses between private and work.

But it also restricts you from claiming each expense item separately. It assumes all your expenses were at that rate and takes in:

  • home and mobile internet or data expenses
  • mobile and home phone usage expenses
  • electricity and gas (energy expenses) for heating, cooling and lighting
  • stationery and computer consumables, such as printer ink and paper

Tax agents have previously warned that the 67 cents per hour method could result in a lower tax deduction.

But the fixed rate method does not involve record keeping as onerous. If you use a tax agent to lodge your tax return, it’s best to check with them what the best method to use is for work-from-home claims.

“One thing we’re focused on this year is making sure that people don’t double dip, so they don’t claim things like their internet or their phone expenses separately if they’re using that fixed rate method,” Mr Thomson says.

“The other thing we’re focused on is the record keeping.

“People need to keep a record of all the hours they’ve worked from home for the whole year. Now that can be a time-sheet, that can be a spreadsheet, that can be a diary, whatever the person wants that works for them.”

How the ‘actual cost’ method works

Here you can claim each expense you have for working from home separately.

But you need to apportion what’s private and what’s work-related.

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