New tax rules will see thousands of Australians receive a smaller tax refund this year after changes to the way work records need to be kept.
The past few years saw an explosion in the number of Australians working from home (WFH). Even after pandemic restrictions were lifted, many people continued to work from home – at least part-time.
WFH meant you could claim expenses such as your energy bill and other utilities on your tax return, as long as they were related to you carrying out your work.
But determining exactly how many hours you spent WFH can be difficult and, frankly, tedious. Which is why the Australian Taxation Office (ATO) allowed people to keep a four-week representative diary that served as proof for the entire work year.
This diary could then be used to calculate your deductions based a fixed rate of 52 cents per hour worked.
The shortcut was meant to ease the administrative burden on both the ATO and taxpayers by providing a quick means of calculating WHF expenses.
This year though, all that changes. With pandemic restrictions behind us, the ATO says it will no longer accept estimates for work hours – you will need to log all WFH hours as they happen.
“Taxpayers need to keep a record of all the hours worked from home for the entire income year – the ATO won’t accept estimates, or a four-week representative diary or similar document under this method from 1 March 2023,” the ATO says.
“Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.”
The fixed rate deduction amount will increase to 67 cents per hour, which sounds good, but accountants are worried the stricter record-keeping requirements will lead to smaller claims being made overall.
They also worry the changes haven’t been publicised well enough and will lead to many Aussies making mistakes at tax time.
Mark Chapman, director of tax communications at H&R Block, told The New Daily it “didn’t make any sense” to change WFH reporting rules so drastically at this point in the year.
“This comes down, simply, to bad timing from the ATO,” he said.
“We’re going to get to tax time and people are going to try to lodge and they won’t have kept records for the previous year – therefore they can’t make a claim.
“You’re potentially going to lose out quite substantially … returns will go down this year, inevitably.”
Do you work from home often? Will these tax changes affect your refund? Let us know in the comments section below.
Also read: Super tax changes will affect 500,000 in future years, analysis finds
