ATO plans publicity campaign for final WFH guidance
The ATO will be publishing its final guidance on ‘work from home’ (WFH) expense deductions. They will alert taxpayers to the changes through a publicity campaign, when it is in effect.
Under the Practical Compliance Guideline (PCG) 2022/D4, a new and more precise record-keeping system was implemented on January 1, which many taxpayers are thought to be unaware of. The ATO said they will be undertaking measures to make sure people are notified.
“We will be undertaking a range of communications through various channels that will coincide with the publication of the final PCG later this month,” the Tax Office said.
After the publication, the communication of the final PCG will be ongoing throughout the period for lodgement of 2023 income tax returns. They reported that they are developing supporting materials, including web content and a fact sheet to assist taxpayers and their advisers.
They expect that many tax professionals will have their own preferences on how they’d like to communicate these changes with their clients, and announced that information and publications will be available by tax professionals to meet these needs.
“We acknowledge and appreciate the important role played by tax professionals and industry associations in the development of the revised fixed rate for working from home deductions. Many have been involved in our consultation processes and have supported the development of the guidance materials.”
The response from the Tax Industry was not well received, with the director of tax communications at H&R Block Mark Chapman making a heavy criticism. He stated that the PCG gave most people Hobson’s choice when it came to WFH deductions.
“Claiming ‘actual costs’ isn’t feasible for many taxpayers — the record-keeping obligations are just too high,” he said. “Therefore for millions of people, they will be forced to claim the 67c an hour fixed rate — which could result in a lower deduction and increased paperwork.” He said.
“The amount that can be claimed is low and the compliance obligations are high — the taxpayer not only needs to keep a record of times spent working from home, but also there is a need to keep an invoice/receipt for each of the additional costs, such as an electricity bill. This is new — it never used to be necessary using either of the old fixed rate methods.”
CPA Australia also raised concerns about its budget submission, saying the fixed rate method required legislation.
“The ATO’s revised fixed rate for WFH expenses is an administrative method and cannot be used as a valid approach at objection where the Commissioner must apply the general principles.”
“To improve certainty and clarity for the ATO and taxpayers, a legislated fixed rate method for WFH expenses should be introduced. This should be similar to the cents per kilometre method for motor vehicle expenses. They said.
“This measure should also address the current uncertainty about the ability to deduct WFH expenses without a dedicated space, absent the revised fixed rate.”
The ATO said the consultation process resulted in updates to the final PCG and it is understood that a collection of comments received would also be published.
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