Claiming Working from Home Expenses: Now and In The Future (July 2024 Tax Update)

Relevant For:

Employees and business people claiming work-from-home expenses.

Key Points:

• ATO focuses on work-related expense claims for 2024 tax time.
• Understanding deduction methods is crucial to avoid errors.
• Two methods: actual cost and fixed rate; choose one annually.
• Adhere to ATO’s three golden rules for eligibility.
• Eligibility: performing employment duties from home, incurring extra costs, keeping detailed records.

Full Article:

The ATO has highlighted working-from-home expenses as a primary area of focus for the 2024 tax season due to it being a common tax claimed in error.

With over eight million taxpayers claiming work-related deductions in 2023, nearly half of which were related to working from home, it’s crucial to understand the correct methods for calculating these deductions to avoid mistakes and ensure accurate lodgement.

Assistant Commissioner Rob Thomson from the ATO advises against simply copying last year’s claim. "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’,” he stated. “Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.”

There are two methods for calculating work from home expenses:

1. the actual cost method; and
2. the fixed rate method.

Both methods necessitate keeping detailed records and adhering to the ATO’s three golden rules: