Australians who work from home will be required to keep a diary of every hour on the job from next month – with accountants predicting new rules will leave them $629 a year worse off.
The tax office has announced that from March 1, they will no longer accept estimates of how many hours someone worked from home or even a four-week summary at the end of each month.
Those who claim phone and internet bills on their tax return won’t be entitled to claim a new fixed, flat rate of 67 cents an hour, coming into effect on July 1.
Accountants H&R Block and Johnston Advisory said this would leave the average work-from-home professional $629 a year worse off.
Australians who work from home will be required to keep a diary of every hour on the job from next month – with accountants predicting new rules will leave them $629 a year worse off (stock image)
Tim Loh, an assistant commissioner with the Australian Taxation Office, said professionals who worked from home would have to keep a record of their hours worked at home, via a diary, timesheets, rosters or an employer computer log.
‘No matter which method you use, make sure to keep records,’ he said on Thursday.
‘This will give you more flexibility to choose the method that gives you the best deduction at tax time depending on your circumstances.’
Mr Loh said those affected would also have to prove they were working from home ‘to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls’.
H&R Block’s director of tax communications Mark Chapman said the changes would leave Australians worse off if they worked from home instead of the office.
‘This new fixed rate is clearly disadvantageous to most taxpayers,’ he told Daily Mail Australia.
‘As well as producing a lower deduction, there are much more stringent record-keeping requirements.’
Ben Johnston, the managing director of accounting practice Johnston Advisory, said the new rules would come as an administrative shock.
‘These are much more onerous obligations than you might have been used to,’ he told Daily Mail Australia.
Tim Loh, an assistant commissioner with the Australian Taxation Office, said professionals who worked from home would have to keep a record of their hours worked at home, via a diary, timesheets, rosters or an employer computer log
Tamara Burns, a chartered accountant with PB Taxation Services in Port Macquarie, said the new rules would be particularly difficult for those who split their week between the home and the office.
New tax rules to leave average Aussie $629 a year worse off
EXISTING RULE: Fixed rate of 52 cents an hour for 1,095 hours a year working at home ($569) plus mobile phone bills ($390), internet ($300) and stationary ($120) adding up to average tax deductions of $1,379
NEW RULE: Fixed rate of 67 cents an hour for 1,095 hours a year working from home ($734) plus additional deductions for cleaning ($16) adding up to average tax deduction of $750
DIFFERENCE: $629 worse off because those who claim phone/internet bills can’t claim a fixed rate
Source: H&R Block’s Mark Chapman about new 67 cent-an-hour rate coming into effect on July 1, 2023
‘The requirement to now record every hour worked from home puts an enormous administrative burden on the individual,’ she said.
‘The impact of this change is huge.
‘There are countless jobs where employees perform some level of work at home.’
Ms Burns said teachers who traditionally marked school assignments at home would also be particularly affected.
‘Teachers are a prime example of an occupation which will be heavily impacted by this requirement,’ she said.
‘On top of all of the work they are expected to do, the fact that they also must keep a record 365 days of the year, instead of just four weeks, to justify their work is just complete bureaucracy gone mad.’
From July 1, those working from home will be able to claim a new fixed rate of 67 cents an hour.
This will replace the old 52 cent rate for those who also did manual deductions, and the old flat rate of 80 cents an hour that was allowed from March 2020, at the start of the pandemic, until June 30, 2022.
H&R Block and Johnston Advisory calculated the changes would leave the average WFH professional $679 a year worse off.
Under the existing 52 cent an hour rule, the typical Australian working from home could claim a total tax deduction of $1,379, with this outgoing fixed rate allowing them to also claim mobile phone and internet bills and stationary on top of the hours working from home, provided they had receipts.
But under this new 67-cents-an-hour rule, that falls to $750.
That is even less than the $876 average of the discontinued flat 80 cent an hour rate where receipts weren’t required for an assumed cost of phone, internet and power bills.
The new rules will stop someone claiming the fixed rate for every hour worked from home if they want to also manually claim phone and internet bills.
‘Everything included in the fixed rate – energy expenses, internet expenses, mobile/telephone expenses, stationery – can be claimed separately but doing so rules you out of claiming the fixed rate at all,’ Mr Johnston said.
‘So if you want to claim mobile phone expenses separately, you can but you can’t then claim the fixed rate at all, even for the other expenses.’
Mr Loh argued the 67-cent-an-hour rate was sufficient to cover phone bills, which have to be itemised under existing rules.
‘Items that are difficult and tedious for everyday Aussies to calculate actual work-use, like phone, internet and electricity expenses, are included in the revised rate,’ he said.
But Mr Johnston said the new fixed rate, while higher than the outgoing 52-cent-an-hour rate, had much stricter conditions.
‘Don’t believe the ATO spin doctors about this being an increase – it isn’t,’ he said.
For 2022-23 tax returns, the ATO will accept a four-week diary covering the total number of hours worked at home covering July 1, 2022 to February 28, 2023.