Since the lockdowns of 2020-2021, the idea of working from home has become much more mainstream, with many still working from home at least some days of the week in 2024.

As we head into the 2023/24 tax season, we offer this refresher on how to claim a tax deduction in your personal tax return, for expenses incurred while working from home.

The Australian Taxation Office offers two methods to choose from, when calculating your working from home tax deduction; the fixed rate method and the actual cost method. Before deciding on which method to use, you will need to fulfil the basic eligibility requirements to claim a deduction. These are:

• That you work from home to fulfil employment duties (i.e. not just checking emails or taking the occasional phone call);

• That you incur additional running expenses as a result of working from home; and

• that you have records to show you incurred these expenses.

As with all expenses, only the portion that relates to your work is to be claimed as a deduction. To calculate this work-related portion, you can use two methods:

1. The fixed rate method - under this method, you can claim 67 cents per hour that you work from home. To determine the hours worked, you need to have verifiable records (eg timesheets, work diary, roster) for the full financial year. You cannot just use an estimate or a four-week sample of your time spent on work-related tasks. This 67 cents per hour is then used to determine the work-related portion of your costs, including mobile phone use, internet, electricity and gas, and stationery/consumables. Some limited costs (eg depreciation on assets) may be claimed separately if applicable.

2. Actual cost method - this method takes more work, as it requires you to calculate each specific running cost's work-related portion (eg itemised phone bill picking up only work-related calls), receipts for stationery, calculating heating/cooling cost per kw hour). The actual cost method also denies a deduction claim if any other householder is using the space that you are using to get your work done, as no additional expense has been incurred if they are using the same household facilities (eg lights, internet, heater etc). As with the fixed rate method, you need records of your hours working from home for the entire year, as well as a four-week diary showing your usual pattern of work.

There are some expenses you cannot claim, regardless of which method you use. These include food and drink items like tea, coffee, milk, any expenses that your employer reimburses, costs relating to childrens' education (eg software subscriptions) and items provided by your employer (eg laptop, mobile phone).

You may wish to review your current record-keeping around your work from home, to ensure you will have the records to support your tax deduction claim. If you need help with claiming a tax deduction for working from home, get in touch with our personal tax team and they will be happy to assist you.

Every effort has been made to offer the most current, correct and clearly expressed information possible within this document. Nonetheless, inadvertent errors can occur and applicable laws, rules and regulations may change. The information contained in this document is general and is not intended to serve as advice. No warranty is given in relation to the accuracy or reliability of any information. Users should not act or fail to act on the basis of information contained herein. Users are encouraged to contact Rhodes Docherty & Co professional advisers for advice concerning specific matters before making any decision.

Rhodes Docherty Financial Advisors Pty Ltd ABN 43 122 391 315 is an Authorised Representative of RDC Advisors Pty Ltd, Australian Financial Services Licensee No. 396268 (Ph. (02) 8294 0988). Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making any decision, you should consider the appropriateness of the advice with regard to those matters.

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