work from home deductions

Working-from-home Deduction Changes

by Advice

The ATO has made some changes to how you can claim work-from-home expenses.

The ATO has scrapped the ‘shortcut method’ for claiming work-from-home expenses. This method allowed taxpayers to claim 80 cents per hour worked from home and was an all-inclusive rate so no other work-from-home related expenses could be claimed on top.

You still have the option of claiming on an hourly basis – but it is much less generous than previously.

There are two methods available to claim work-from-home expenses: (1) Fixed Rate Method, and (2) Actual Cost Method.

Fixed Rate Method

The ATO has updated the fixed rate method from 52 cents to 67 cents per hour. However, the new fixed rate now covers all ongoing expenses such as phone bills, internet and utility expenses while working from home.

The only additional expenses that can be claimed on top of the hourly rate are new equipment, office furniture and cleaning (if you have a dedicated home office).

The changes don’t stop there, the ATO has also introduced stronger record-keeping for at-home expenses. From 1 July 2022 to 28 February 2023 taxpayers can provide a four-week diary representing their hours worked from home. From March 2023 onwards, the ATO will require each hour worked from home to be recorded.

Actual Cost Method

The Actual Cost Method remains unchanged and allows you to claim a deduction for the actual expenses you incur. This method takes all of the at-home expenses and then proportions them for their work-related use. These include internet, phone, electricity, computer consumables, stationery, and cleaning (if you have a dedicated home office). A detailed diary is not required – a 4-week period that represents your work use can be used. You will need to keep copies of invoices and bills.

Which rate will be best for you will depend on your individual circumstances. Generally, we find that in most cases the actual cost method gives a greater deduction. When preparing your return, we will do an analysis to ensure you get the best deduction possible.

Please reach out to Activ8 for more information on what’s required to claim home office expenses and your eligibility to maximise your return.

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Introduction Of Deduction For Skills Training & Technology Costs

by Advice

120% deduction for skills training & technology costs

This was originally announced in 2022 budget by the Morrison Government. It has been adopted by the current Government and on the 21st June 2023, the legislation to allow these measures was finally passed.

Technology Investment Boost

The Technology Investment Boost is a 120% tax deduction for expenditure incurred on business expenses and depreciating assets that support digital adoption, such as portable payment devices, cyber security systems, or subscriptions to cloud-based services. 

The boost is capped at $100,000 per income year with a maximum deduction of $20,000. 

The $20,000 bonus deduction is not paid to the business in cash but is used to offset against the assessable income. If the company is in a loss position, then the bonus deduction would increase the tax loss. The cash value to the business of the bonus deduction will depend on whether it generates a taxable profit or loss during the relevant year and the rate of tax that applies. 

Skills and Training Boost

The Skills and Training boost is a 120% tax deduction for expenditure incurred on external training courses provided to employees. This incentive will not apply to sole traders and independent contractors. 

External training courses will need to be provided to employees in Australia or online and delivered by training organisations registered in Australia. 

The training must be necessarily incurred in carrying on a business for the purpose of gaining or producing income. That is, there needs to be a nexus between the training provided and how the business produces its income. 

Note that the additional deduction relating to the 2021/22 financial year is to be claimed in the 2023 tax returns.  

If you require further information on any of these measures, please do not hesitate to contact our office on (07) 3367 3366.