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Maximising Your Work from Home Tax Deductions: What You Need to Know About the New ATO PCG 2023/1


A home office that is affected by the new taxpayer PCG from the ATO which affects the way work from home deductions are claimed.

It's official, the ATO has finalised the much-anticipated PCG 2023/1. In this article, we'll take a closer look at the winners and losers of this PCG (spoiler alert: the ATO wins, and taxpayers lose).


To give you a quick recap, work from home expenses has been a popular claim for Australian taxpayers, especially during the COVID pandemic. The ATO has allowed taxpayers who work from home to choose between the fixed rate method or the actual expenses method. The fixed rate method provides a general claim based on the number of hours worked (which was previously $0.52 per hour), while the actual expenses method allows taxpayers to claim the exact usage of work from home costs. Both methods require taxpayers to have records to prove their claim and a dedicated work area. For more information on these methods available for the financial years preceding and including 2022, check out our 2 Part series on working from home expenses here (Part 1, Part 2).


The New Method


Initially, we planned to compare the revised method to the previous fixed rate method, but we'll cut to the chase: the new method is not as good or lenient as the old method. The new fixed rate method has increased to $0.67 per hour worked from home. The table below outlines a comparison of the inclusions of each method:

​$0.52/hour method

$0.67/hour method

Energy & Gas Costs

Energy & Gas Costs

Home Office Furniture

Phone Costs

Cleaning Costs

Internet Costs

Computer Consumables

Stationery

Note: If you claim the $0.67/hour method for a 6-month period, you're waiving your right to claim your phone use as a work-related deduction during that same period.


There are also some minor changes in the application of this claim:

  • There's no longer a requirement to have a dedicated work area. You can work in any part of the house, shared or not, and still make a claim.

  • Other people in the house can use different methods to calculate their claims.

  • Only the person whose name is on the bill (e.g. internet bill) can make a claim.

  • If the ATO deems that you're unable to make a claim for the $0.67 method, you can't object to their decision.

  • Previous items that weren't claimable (such as depreciation on furniture) are now available as a separate claim.

Probably the most significant change with the new method is the substantiation requirements. Previously, the ATO required a rough estimation of the hours worked from home to prove the claim. Now, depending on the period in the 2023 financial year, you'll need to keep records according to the following:

  • 01 July 2022 - 28 February 2023: A record of hours that's "representative" of the hours worked from home.

  • 1 March 2023 - 30 June 2023 and beyond: A record of the actual hours worked from home.


The Takeaway


With the changes to work from home expenses, it's become increasingly important to keep records and documents that support your claim. We recommend keeping a log of actual hours worked from home, rather than a rough estimation based on the number of days worked from home. Due to the inability to object to the ATO's decision, we also recommend keeping records and receipts of all work from home expenditure, including stationery and computer consumables. If the ATO disallows a $0.67 method deduction, you'll want to make sure you can still make a claim using the Actual Expenses method.


Don't be surprised if your tax accountant asks you questions like "How many hours did you work from home this year?" or "Can you provide me with a copy of your work from home log?" These questions are essential to ensure that your work from home claim is maximised with the least risk of ATO interference.


At Maurer Taxation, we take this approach to fulfill our purpose of providing the best possible tax services to our clients. If you have any tax-related questions or need help with your tax obligations, contact us today for a free, no-obligation quote. Our team of experienced tax accountants will be happy to assist you in navigating the new work from home expense rules and making sure you are maximising your tax deductions while minimising your risk of ATO interference. Remember, keeping accurate records and documentation is crucial, so start logging your actual hours worked from home and retaining all relevant receipts and documents now to ensure a smooth tax season.


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