Navigating Working from Home Expenses
In the evolving landscape of work, the shift towards remote working arrangements has brought about a significant focus on the home office. At Strategem Financial Services, we understand the intricacies involved in effectively managing your work from home expenses. This guide aims to provide our clients with a thorough understanding of the potential deductions available, ensuring you're well-equipped to maximise your claims with Strategem as your accounting partner.
Eligibility to Claim
To be eligible for work from home expense deductions, you must have spent the money yourself without reimbursement, the expense must directly relate to earning your income, and you must have a record to prove it. It's essential for the expense to be part of your employment, not just a necessary condition of working from home.
To claim working from home expenses, you need to meet certain criteria:
Your work from home must be substantive - not just minimal tasks such as occasional emails or calls.
You must incur additional running expenses directly because of working from home.
You should keep records to support your claims.
Remember, only the work-related portion of these expenses is deductible if the use is for both private and employment purposes.
Additional Running Expenses
Working from home may incur various running expenses that potentially qualify for deductions. These can include electricity and gas for heating, cooling, and lighting the area you're working from, the costs associated with repairing home office furniture and equipment, and phone and internet expenses.
Running expenses may include additional costs for:
Energy for heating, cooling, and lighting.
Internet or data usage, whether home or mobile.
Phone expenses, covering both mobile and home.
Stationery and other office supplies.
Depreciation of office equipment and furniture.
Maintenance for depreciating assets used for work.
For those with a dedicated home office, you may claim a portion of occupancy expenses like rent or mortgage interest, and cleaning expenses.
Choosing a Method to Calculate Your Claim
The Australian Taxation Office allows several methods for calculating your work from home expenses. These include the shortcut method, the fixed rate method, and the actual cost method. Each has its criteria and applicable rates, making it crucial to choose the most beneficial and compliant method for your circumstances.
From 1 July 2022, there are two primary methods to calculate your claim:
Revised Fixed Rate Method:
A set rate per work hour for additional running expenses.
Separate claims for expenses not covered by the revised fixed rate.
Actual Cost Method:
Claims based on the actual expenses incurred from working from home.
Whichever method you choose, maintaining records to prove your incurred expenses is crucial. Your Strategem Accountant can help you with this.
Prior Year Work from Home Methods
It's also worth noting the methods available for previous financial years, as the ATO occasionally updates these guidelines. Being aware of these changes ensures that you're claiming deductions accurately and maximising your return.
For previous income years, you may refer to the methods outlined in the provided table to calculate your deductions.
Expenses You Can't Claim
Not all expenses related to working from home are deductible. It's important to differentiate between what constitutes a work-related expense and what falls outside the scope of ATO guidelines. Examples include rent, mortgage interest, water charges, and general household items.
You cannot claim deductions for:
General household items like coffee or tea.
Equipment or subscriptions for your children's education.
Items provided by your employer, such as laptops or phones.
Any expenses that your employer reimburses.
Strategem's Expert Guidance on Maximising Your Deductions
At Strategem Financial Services, we're dedicated to navigating the complexities of work from home deductions on behalf of our clients. Our expertise in ATO regulations and proactive approach ensures that you can confidently maximise your expense claims while remaining compliant. We offer personalised consultations, expert advice on record-keeping, and strategic planning to enhance your deductions effectively.
Whether you're adjusting to a new work from home routine or seeking to optimise your existing expense claims, Strategem is here to support your financial journey. Our commitment to providing tailored solutions reflects our dedication to your success.
Contact Us
To explore how we can assist you further with your work from home expense claims and beyond, contact us today. Our team is ready to provide you with the expert support and guidance you need to navigate your financial landscape efficiently.
We are here to help
For further advice on this topic, please do not hesitate to contact our office on (03) 5445 4777, where one of our accountants will be available to support you.
