The work-from-home tax return shortcut is about to end

It ends with the current fiscal year, which means that taxpayers will have to use the fixed rate method or the actual cost method to claim labor costs from July 1.

The Institute of Public Accountants’ managing director of tax policy, Tony Greco, said the temporary shortcut method significantly reduces the administration required for taxpayers.

“With so many workers still working entirely from home or in a hybrid model, his demise will increase the administrative challenge for taxpayers trying to claim home office expenses from July 1, 2022,” he said.

“The shortcut method allowed each taxpayer in the household to independently claim this deduction at the same time and in any part of the household.

“If three people in an apartment huddle around the kitchen table doing work-related tasks, then that’s acceptable using the temporary method which has significantly relaxed the eligibility rules.”

Under traditional claim methods, the group would have to register their homes, provide tax bills and split usage between personal and work-related, on a “reasonable basis”.

In 2020, accountants H&R Block warned that the shortcut could reduce tax returns and advised taxpayers to claim their individual expenses instead.

Tax Institute senior counsel Robyn Jacobson said simplified record-keeping requirements have provided millions of taxpayers with an easy-to-calculate method of claiming expenses while working from home.

She said the need for a dedicated workspace as part of the deduction claim rules should be removed in the future.

“The flat-rate method, currently 52 cents per hour, does not include telephone and internet expenses, nor the depreciation of office equipment.

“It can be very difficult to determine the extent to which phone and data plans are used for taxable purposes, as most people do not receive itemized bills these days, and there are download volumes these days. much more prominent in homes for personal use such as streaming TV shows and movies.

“The flat rate method also requires the taxpayer to have a dedicated workspace that they use when working from home. The 52 cent rate may no longer be appropriate given rising electricity and gas costs.

ATO deputy commissioner Tim Loh said officials were considering ways to modernize the work-from-home deduction methods for the 2022-23 fiscal year.

“It is important that taxpayers keep good records so that for the 2022-23 financial year they have the choice of the method of working from home that is most appropriate to their situation, including records of all hours worked from home, receipts for all depreciating assets and equipment used while working from home [and] records of personal and business use of assets and work-from-home expenses.