Individuals have had the choice of claiming deductions for home office running expenses either using the actual or revised rate method of 67 cents per hour since 1 July 2022. A key focus of the ATO’s guidance is on the revised fixed rate method.
First, the ATO explains that there are no requirements around minimum hours worked from home before someone is entitled to use the revised fixed rate method. This is as long as the following conditions are satisfied:
- They perform genuine work or business activities from home (rather than just carrying out minor tasks such as checking emails or taking calls);
- They personally incur additional running expenses as a result of this work; and
- They keep and retain relevant records.
In relation to record keeping, the ATO also explains that taxpayers must have records showing the total number of hours they have worked from home during the income year (including their start and finish time on relevant days). This can be recorded through a diary, spreadsheet, rosters or timesheets and must be recorded contemporaneously.
Apart from a transitional period which has now expired, estimates or a sample period of representative hours worked from home are no longer accepted.
While this is not available to individuals who use the revised fixed rate method, the ATO also clarifies that individuals using the actual method to claim home office running expenses may also be entitled to claim additional deductions for mobile phone call and data usage costs.
The challenge then becomes apportioning the deduction between work and private use. While there might be several ways to undertake such an apportionment, the ATO considers the easiest way to manage this is for individuals to keep a diary over a continuous 4-week period (e.g., of the type of calls made and time spent using the internet for work versus private use).
Finally, the ATO cautions that an employee generally can’t claim deductions for occupancy expenses such as rent, insurance or interest on their mortgage. This is unless their home meets the conditions to be considered a ‘place of business’, which tends to be less common for employees.