ATO to increase fixed rate for WFH expenses to 70¢

The Australian Taxation Office is set to increase the fixed rate for calculating working from home expenses to 70¢ per hour, from 1 July 2024.

Editor’s note: This story first appeared on HR Leader’s sister brand, Accountants Daily.

The ATO has updated Practical Compliance Guideline 2023/1 to increase the work-from-home fixed rate to 70¢ per hour. The new rate will apply for the 2024–25 financial year.

The fixed-rate method allows taxpayers to claim a fixed rate for each hour they work from home during the relevant income year.

The rate includes running expenses incurred for home and mobile internet or data expenses, mobile and home phone usage expenses, electricity and gas for heating, cooling, and lighting, and stationery and computer consumables.

The ATO has previously warned that when using this method, taxpayers cannot claim an additional separate deduction for these expenses.

The fixed-rate method was previously set at 67¢ for the 2022–23 and 2023–24 income years and was 52¢ per hour for 2021–2022.

Last year, ATO assistant commissioner Rob Thomson reminded taxpayers that anyone using the fixed-rate method would need a record of the actual number of hours they worked from home for the whole financial year and at least one record of each additional running expense that they’ve incurred, such as an electricity bill.

“To log the hours that have been worked, a sufficient system needs to be used, such as a timesheet, spreadsheet, diary or logbook,” he said.

Taxpayers who want to use the actual cost method will need to keep more detailed records and calculations.

“This includes the hours you work from home, whether this be the total hours or a full-week record that represents your usual pattern of work,” he said.

“You’ll need to have evidence of each expense you’re claiming, showing each cost, the supplier, the nature of the good or the service, the date each expense was paid, and the date on each document.”