Australian Tax Office changes to working from home claims set to impact thousands

The Australian Tax Office (ATO) has announced an increase to the fixed rate for working from home tax deductions that will see the claim amount increase from 52 cents to 67 cents per work hour.

But experts say the new changes may catch some taxpayers "off guard" because of the additional record keeping that is involved.

The increase applies from July 1, 2022 and can be claimed in 2022-23 tax returns.

ATO assistant commissioner Tim Loh said the changes will also see the fixed rate account apply for expenses including phone, internet and utilities to "better reflect contemporary working from home arrangements".

"Items that are difficult and tedious for everyday Aussies to calculate actual work-use, like phone, internet and electricity expenses, are included in the revised rate," he said.

"Another benefit is that you no longer need a dedicated home office to use the fixed rate method."

Davidsons Accountants tax and business services director Kylie McEwan told ACM while the changes seemed "great at face value", they actually might reduce taxpayers' ability to claim on working from home expenses.

"The devil's certainly in the detail," she said.

"If you're claiming a work from home [expense] under the fixed rate method, you can't then claim a similar expense for other types of use.

"The tax office position that it better reflects the contemporary working from home arrangements is questionable."

She said the revised fixed rate would limit the amount workers could claim back on expenses such as phone use.

Taxpayers would also be unable to get deductions on items used for home-based, side businesses under the new fixed rate, according to Ms McEwan.

"That increase in rate has dragged in a heap of expenses that you could originally claim on top," she said.

"That's a cost that will certainly result in a reduction in work from home claims across a lot of taxpayers."

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Ms McEwan said the greater record keeping requirements for the fixed rate method and introducing the changes in the middle of the financial year would also make the tax return process challenging for workers.

"There are requirements around keeping a work diary, keeping certain utility and phone bills to make sure you can support your claim that haven't been [required] previously," she said.

"That's going to catch a lot of people off guard."

While fixed rate rules have changed, the actual cost method of claiming deductions on working from home expenses will remain the same.

Ms McEwan said she recommended taxpayers made assessments with their accountants or tax agents to establish the most beneficial method for their circumstances.

"Going down the actual cost method will require more record keeping than even this revised fixed rate method," she said.

"But we are in a situation now where the fixed rate method is going to potentially limit your ability to claim certain deductions correctly."