ATO Increases Work-From-Home Deduction Rate: What It Means for You
The ATO has increased the fixed-rate deduction for working from home, effective from 1 July 2024.
Taxpayers can now claim 70 cents per hour for each hour worked from home, up from the previous rate of 67 cents per hour. This change reflects the latest data from the Australian Bureau of Statistics regarding relevant expenses.
What Is the Fixed-Rate Method?
The fixed-rate method allows individuals to calculate a deduction for additional expenses incurred due to working from home. Instead of tracking each individual expense, taxpayers can use a fixed rate for each hour worked from home.
The types of expenses included under this method are:
Electricity for heating, cooling, and lighting
Home internet
Mobile and home phone usage
Stationery and computer consumables (such as paper and printer ink)
It is important to note that if you use the fixed-rate method, you cannot claim a separate deduction for any of these expenses, as they are already covered under the fixed rate.
For those who prefer a more detailed approach, the actual cost method is available, where you track the actual expenses you incur. However, using the actual cost method requires more record-keeping and calculation.
Who Can Claim the Deduction?
You can use the fixed-rate method to claim a deduction if:
You work from home as part of your employment or business
You incur additional costs because of working from home
You keep relevant records, such as invoices or receipts, to support your claims
You do not need a dedicated home office or workspace to use the fixed-rate method.
How to Calculate Your Deduction
To calculate your deduction using the fixed-rate method:
Determine how many hours you worked from home during the year.
Multiply the total hours worked by the fixed rate (70 cents per hour).
Add any deductions for depreciating assets used for work, such as a computer or office equipment.
The total of these calculations will be the amount you can claim as a tax deduction.
Why the Change?
The increase in the fixed rate by 3 cents per hour is based on updated data from the Australian Bureau of Statistics, which tracks changes in the cost of living and inflation. The ATO has confirmed that while the rate has changed, the types of expenses you can claim and the eligibility criteria remain the same.
Talk to us about making a claim
The increase in the work-from-home fixed-rate deduction provides a simplified way for taxpayers to claim additional expenses incurred while working from home. With the new rate of 70 cents per hour, effective from 1 July 2024, individuals can benefit from a straightforward method of calculating their tax deductions without the need for detailed tracking of individual expenses.
Taxpayers can choose the method that best suits their circumstances, ensuring they keep appropriate records to support their claims. The change aims to simplify the process of claiming working-from-home expenses while reflecting updated data on household costs.
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