Everything You Need to Know About Your Work From Home Deductions

If you worked from home during the 2024 financial year, this blog is for you! The nature of how WFH expenses are claim is becoming increasingly strict, so ensure that your record keeping method is conducive to your business. Everything you need to know about claiming WFH deductions is in here…

How do I know if I’m eligible?

Firstly, to claim working from home (WFH) expenses you must:

Be working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
Incur additional expenses as a result of working from home

Secondly, to claim a deduction for expenses you incur when WFH you need to:

use one of the methods set out below to calculate your deduction; and
keep records that show you incurred the expenses.

The two methods of calculating your deductions are the revised fixed rate method and the actual cost method. Don’t worry, we set out what these are for you!

Revised Fixed Rate Method

You can use this method if you:

incur additional running expenses as a result of working from home
be working from home to fulfil your employment duties, not just completing minimal tasks (like checking work emails)
keep records at the time you work to prove you incur the cost.

The ATO has decided that you DON’T need to have a dedicated office to qualify for this method.

What is the rate?
The claim is a fixed rate of 67 cents for each hour you worked from home.

What does this rate include?

Data and internet
Mobile and home phone usage
Electricity and gas for heating, cooling and lighting
Computer consumables
Stationery

What can I claim in addition to this rate?

decline in value of depreciating assets other than home office furniture and furnishings used for work purposes – for example, computers and laptops.
repairs & maintenance of these assets
cleaning (only if you have a dedicated home office)

Actual Cost Method

Who can use this method?
If you have kept records which show the amount you spent, depreciating assets you buy and use while working from home and or work-related use for your expenses and depreciating assets

How does it work?
You can work out your deduction by calculating the actual expenses which may include the following expenses:

Data and internet
Mobile and home phone usage
Heating, cooling and lighting
Computer consumables and stationery
Decline in value of depreciating assets
Cleaning expenses (only if you have a dedicated home office)

How do I calculate my ‘actual expenses’?
If you have a designated home office, you can apportion the size of the office relevant to your total house size. For example, if your home office covers 15% of your home you can claim 15% of your heating, cooling and lighting charges.
For expenses such as phone and internet, you apportion the work-related component of these expenses. For example, if your internet charges for the year are $500 and your work-related % is 80%, you can claim $400 under this method.

What records do I need to keep?

Receipts, bills, invoices showing supplier, amount, description, date paid, etc
Evidence of your personal and work-related use
You must record of the number of actual hours you work from home during the income year
Diary for a representative four-week period to show your usual pattern of working at home

Deciding which method works for you depends on your personal circumstances. For many people the actual cost method will lead to a larger deduction, but some will find the new 67c per hour works out better.
The most important thing for you to remember is the strict new requirements for record keeping, especially tracking the hours you work from home across the year in a calendar or diary

Looking for some help on figuring out your WFH deductions? MKS Group has a team of experts that can help. Contact our team today: hello@mksgroup.com.au