Insights from our Senior Accounting Manager on Working from Home: Tax Deductions and Record-Keeping

In recent times, working from home has become increasingly common. Whether you're adapting to remote work or have embraced a flexible work environment, understanding your eligibility for tax deductions related to home office expenses is crucial.

Rebecca Davies, our Senior Accounting Manager, shares valuable insights to help you navigate this aspect of your finances effectively.

Methods for Claiming Deductions

1. Fixed Rate Method:

This method allows you to claim a deduction of $0.67 per hour worked from home. 
A dedicated home office is not required.

The fixed rate covers a range of expenses including:

• Data and Internet usage
• Mobile and home phone usage
• Electricity and gas
• Computer consumables and stationery

Additionally, you can claim separate deductions for:

• Depreciation of your home computer or laptop
• Depreciation of home office furniture
• Repairs and maintenance of these items
• Cleaning costs (only if you have a dedicated home office)

Record-keeping for Fixed Rate Method:

• Maintain a record of the number of hours worked from home for the entire year (e.g., timesheets, rosters, diary entries).
• Provide evidence that you incurred costs covered by the fixed rate.
• Keep invoices/receipts for the costs of computers, laptops, home office furniture, etc.

2. Actual Cost Method:

Under this method, you can claim a deduction for the actual costs incurred as a result of working from home.

This includes:

• Data and Internet usage
• Mobile and home phone usage
• Electricity and gas
• Computer consumables and stationery
• Depreciation of your home computer or laptop
• Depreciation of home office furniture
• Repairs and maintenance of these items
• Cleaning costs (only if you have a dedicated home office)

This method requires detailed calculations and records.

Record-keeping for Actual Cost Method:

• Keep invoices/receipts for all expenses being claimed.
• Provide evidence of your personal and work-related use of the items being claimed.
• Maintain records showing the hours worked from home (e.g., timesheets, rosters, diary entries for a 4-week period showing a regular pattern of working from home).

General Rules for Work-related Tax Deductions

To claim a deduction for any work-related expense:

• You must have personally incurred the expense and not been reimbursed by your employer.
• The expense must be directly related to earning your income.
• Keep records of all expenses, such as invoices or receipts.
• If an expense is used for both private and work-related purposes, only claim the portion attributable to your work.
• For assets costing more than $300, add them to your depreciation schedule and claim deductions for their decline in value.

Understanding these guidelines can significantly impact your tax return. Consult with one of our tax professionals

To ensure you maximise your deductions while remaining compliant with current tax laws.

At Fortuna Advisory Group we're committed to helping you navigate these complexities to secure your financial well-being.

Contact us today to get started!