As tax time for 2024 in Australia approaches, one of the ATO assistant commissioners, Rob Thomson, has outlined some of the main errors that are being made regarding WFH-related expenses – primarily expressing the importance of understanding the two main methods that are available when it comes to claiming these deductions.
This includes the fixed rate method and the actual costs method – let’s start with the former one, which essentially allows you to claim a fixed amount for each hour that you’re working from home.
Thomson mentions that some of the record keeping requirements have been altered – now requiring you to keep track of all the hours you’ve worked from home for the entire year, whether that’s through some form of accounting software or a timesheet.
Furthermore, he states that they not only increased the rate to 67c per hour but some of the deductions that can be included in this fixed rate method – meaning it now includes certain things such as telephone and internet.
Ultimately, Thomson stresses the importance of not ‘double dipping’ and claiming that particular expense somewhere else if you happen to be using the fixed rate method.
As for the actual costs method, it’s also crucial for you to keep a record that shows the expenses you’ve incurred and how you’ve managed to calculate how much of that expense is directly work-related, keeping a record for each expense.
This also applies for car-related expenses, Thomson mentions, stressing that tax practitioners need to ensure that their clients keep accurate records for whatever method that is being used – this extends to the logbook method and the importance of separating the hours of personal use and work-related use.
At this point, it’s crucial that you keep a receipt of things such as fuel and any maintenance you require so that you’ve got evidence of all the expenses that you’re trying to claim.
Finally, Thomson notes that if you’re using the five cents per kilometre method, you need to keep in mind that it’s an all-inclusive method that also covers your fuel, maintenance, and registration – therefore, you need to avoid ‘double dipping’ and claiming those kinds of costs elsewhere in your tax return.
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