Yahoo Finance ATO warning over $1,400 tax deduction millions of Aussies can claim: ‘Watching closely’
Aussies can claim work-from-home tax deductions without keeping a logbook but they'll still need to have records.
Millions of Aussies who work from home (WFH) could claim a $1,400 tax deduction without keeping a logbook. But taxpayers are being warned their WFH deductions will be on the Australian Taxation Office’s (ATO) hit list this year.
There are two methods that Aussies can use to claim WFH deductions: actual expenses and the fixed-rate method. The fixed-rate method allows you to claim a fixed tax deduction of 67 cents for every hour worked from your home office.
Financial adviser Ben Nash said it worked out to about $1,400 a year for WFH deductions for those who worked 40 hours a week from home. This deduction could potentially be even bigger if you are working longer hours.
RELATED
Urgent tax warning as Aussies hit with ATO bills: ‘Hunting down debts’
$700 cost-of-living cash injection Aussies could claim this month
Nash said you don’t need a logbook to claim the fixed-rate method but you do need to keep records in case the ATO asks questions. He noted the ATO was “watching closely” this tax time.
"If you've got really high work from home deductions, it's probably likely that the ATO will ask questions because it's one of the things that they're flagging," Nash explained to Yahoo Finance.
With a lot of people working from the office more than a couple of years ago during the pandemic, Nash said you needed to be careful about claiming the “exact same amount” as you were during COVID.
In 2023, around four million people claimed a deduction related to working from home. More than half who claimed WFH expenses used the fixed-rate method.
Do you have a tax story to share? Contact tamika.seeto@yahooinc.com
What records do I need?
Tax Invest Accounting director and registered tax accountant Belinda Raso said you needed to keep a record of every hour that you worked from home during the financial year.
“The most important point to know is it can be your timesheets, your rosters, a spreadsheet or a diary but you must deduct all your personal leave, annual leave, any public holidays and any time that you weren't working from home,” she told Yahoo Finance.
“If you just go and do say 38 hours by 48 weeks, they will look at that and they’ll go no, that’s not correct.”
Raso said a simple spreadsheet was likely “the best way to go” and could be done cheaply and easily.
The ATO said you’ll also need a record of the additional running costs you incurred, such as a copy of your electricity or internet bill.
ATO warning over WFH deductions
Work-related expenses, including WFH deductions, are one of the key focus areas for the ATO this tax time.
The ATO said taxpayers now needed to have comprehensive records to substantiate fixed-rate WFH claims, as they would for any other deduction.
“Copying and pasting your working from home claim from last year may be tempting, but this will likely mean we will be contacting you for a ‘please explain’,” ATO assistant commissioner Rob Thomson said.
“Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.”
If you don’t use the fixed-rate method, you will need to use the actual cost method where you calculate the actual additional expenses you incurred when working from home.
You can see our breakdown of work-from-home deductions, along with why using the “fixed rate method” over the “actual cost method” could leave you worse off.
Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.
