Changes to Working From Home Tax Deductions (2023 Tax Year)
If you are someone who claims working from home tax deductions in your tax return then listen up!
We have summarised the changes for the 2023 tax year below:
1. Removal of the shortcut method fixed rate of 80c per hour (that was introduced in 2020)
2. Changes to the record keeping requirements
From 1 March 2023 you are now required to keep a diary for the full year with a record of the total number of hours you worked from home (such as a timesheet, roster or diary)
THIS IS THE MOST IMPORTANT CHANGE, WITHOUT A DETAILED LOG YOU WILL NOT BE ABLE TO CLAIM ANY WORKING FROM HOME TAX DEDUCTIONS
3. Changes to the fixed rate method
The rate has increased from 52c to 67c per working from home hour & designated work area/room setup as home office is no longer required.
Summary of Working From Home Tax Deductions for the 2023 tax year (click on image to open up a clearer image):
To be eligible for these deductions, you need to actually be performing your work duties at home, not just coming home from work and doing a couple of extra tasks or checking emails.
If you incur costs while working from home, and your employer reimburses these for you, you cannot claim them in your tax return. If you are not reimbursed by your employer, but you receive an allowance, you can claim the expenses, but you must also claim the allowance received as income (these should come through on your payment summary at year end).
Claiming occupation costs can apply to you if your business is at home and you do the work at home, or your business doesn’t own or rent a separate premise, but does all the work from home e.g. a carpenter who does all their record keeping and admin at home.
You will be able to claim one of the above methods, depending on your situation.
If you have a company or trust the expenses must be claimed in your personal return against your employment income, they cannot be claimed in the company or trust
Please be advised that whilst we applaud your creativity on certain claims that you try to put through but the following are not deductible (even if you are running a business from home):
- coffee, tea, milk
- purchasing and running of a dishwasher to wash your coffee cups
- mowing the front lawn of your house
- slow cookers to allow you to work more hours
- other household items such as toilet paper
- pest control
- cleaning unless they are specifically cleaning the home office room and invoicing separately\
**Yes the above are actual items people have tried to claim in the past
We hope this short post has been an informative one and our summary helps you to understand the complexities of this area of tax.
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