Date posted: 11/11/2022

Tax experts question ATO’s new working from home deduction method

Peak accounting body Chartered Accountants Australia and New Zealand (CA ANZ) has welcomed the ATO’s latest changes to the work from home tax deduction shortcut method but raised concerns around the technicalities.

CA ANZ Tax Leader Michael Croker said the good news is that the ATO has finally agreed to continue a working from home shortcut tax deduction method, but the bad news is that it’s less generous.  

“We have been waiting with bated breath to hear the fate of the much-loved working from home shortcut method,” Mr Croker said.  

“We called for the 80 cents per hour shortcut to be made permanent this year, but the ATO has stopped short of this, instead offering a less generous 67 cents per hour deduction.  

“At a time when cost of living pressures are surging, and office workers continue to enjoy flexible working arrangements, keeping the shortcut at 80 cents would have been well received.”  

Mr Croker stressed the importance of record-keeping to justify the 67 cent per hour deduction claim.  

“Back of the envelope calculations aren’t acceptable to the ATO.”  

Given the latest ATO guidance was issued so late in the new Financial Year, the ATO is splitting the substantiating method into two periods, requiring taxpayers to keep:  

  • A record which is representative of the total number of hours worked from home during the period from 1 July 2022 to 31 December 2022, and 
  • A record of the total number of hours actually worked from home for the period 1 January 2023 to 30 June 2023.  

Acceptable records include timesheets, rosters, a diary, or similar document.  

Mr Croker also said the 67 cent per hour method might not produce the best outcome tax-wise.  

"You may get a bigger tax return by doing the actual cost method which involves individually claiming for costs,” Mr Croker said.  

“We know the ATO is sharpening its sights on tax claims this year – so a quick call to your Chartered Accountant or tax expert could help you decide which option is right for you.  

“Our advice is simple when it comes to tax time: play it with a straight bat and don’t try it on with the ATO.”

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