During COVID 19 there were three methods that could be used to calculate working from home expenses

1. Shortcut method available from 1 March 2020 to 30 June 2022 (whilst working from home due to COVID 19)
2. Fixed rate method available from 1 July 1998 to 30 June 2022 (home office running expenses and electronic device expenses)
3. Actual expense method – that is calculating the actual expense incurred as a result of working from home.

From 1 July 2022 taxpayers can continue to claim their actual expenses or alternatively use the revised fixed rate method.  The shortcut method is no longer available to be used.

The revised fixed-rate method apportions the following additional running expenses you incur on a fair and reasonable basis by using a fixed rate of 67c per hour for each hour you worked from home during the income year:

• energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while working from home
• internet expenses
• mobile and/or home telephone expenses, and
• stationery and computer consumables.

The rate per hour calculates the total of your deductible expenses for energy , internet, mobile and/or home telephone and stationery and computer consumables for the income year.

This means you cannot claim an additional separate deduction for any of these expenses. For example, if you use your mobile phone when you are working from home and when you are working from somewhere other than your home, your total deduction for mobile phone expenses for the income year will be covered by the hourly rate of 67c per hour.

To calculate your total deduction for running expenses using the revised fixed-rate method, you:

1. calculate the number of hours you worked from home during the income year based on your records
2. multiply the total number of hours you worked from home during the income year by 67c per hour
3. calculate the work-related decline in value of any depreciating assets that you used to work from home during the income yearand any other running expenses you incurred
4. add the amounts calculated at points b and c above, this is the amount you claim as a deduction in your income tax return.

To satisfy this working from home criteria, you must be working from home while carrying out your employment duties or while carrying on your business on or after 1 July 2022. The work has to be substantive and directly related to your income-producing activities.  Minimal tasks such as occasionally checking emails or taking telephone calls while at home will not qualify as working from home.

If you have any questions regarding this or other tax matters please contact the team at Journey2.