If you’re planning to claim working-from-home expenses using the ATO’s Fixed Rate Method, now is a great time to check that your records are in order.
Many taxpayers assume that simply working from home means they automatically qualify for the deduction. However, the ATO requires specific evidence to support any claim made under the fixed rate method.
What Is The Fixed Rate Method?
The fixed rate method allows eligible taxpayers to claim a set rate per hour worked from home to cover certain running expenses associated with working remotely.
While it can simplify the calculation process, it doesn’t remove the need for good record-keeping.
The Two Key Requirements When Working-From-Home
To use the fixed rate method, you generally need:
1. A Record Of Your Actual Hours Worked From Home
You must keep evidence showing the number of hours you actually worked from home during the claim period.
Examples may include:
- Timesheets
- Rosters
- Work diaries
- Time-tracking records
- Employer records
- Digital calendars
The important point is that the records must demonstrate the actual hours worked from home.
2. Evidence Of Additional Running Expenses
To claim under the fixed rate method, you must incur additional running expenses because you are working from home.
You should keep at least one record for each type of running expense being covered by the fixed rate calculation.
Examples include:
- Electricity bills
- Internet bills
- Mobile phone bills
- Home phone bills
- Data usage records
Although you’re using a fixed rate rather than claiming each cost individually, evidence that these expenses have been incurred is still required.
A Common Mistake We See
One of the most common issues occurs when taxpayers track their hours worked from home but don’t retain supporting records for their running expenses.
Another common problem is estimating hours rather than keeping contemporaneous records.
Both situations can create difficulties if the ATO reviews your claim.
Our Recommendation
If you’re currently working from home, start collecting your records now rather than trying to find them at tax time.
Keeping copies of:
✔ Internet bills
✔ Electricity bills
✔ Work-from-home diaries
✔ Timesheets and rosters
throughout the year can make the tax return process much smoother and help ensure your claim is properly supported.
Need Help?
If you’re unsure whether your working-from-home records meet the ATO requirements, contact our office. We’d be happy to review your situation and help ensure you’re claiming correctly.
Remember, a few minutes spent keeping good records today can save a lot of stress later.
Important Disclaimer
This article contains general information only and does not take into account your personal circumstances. Tax outcomes vary between individuals and professional advice should be obtained before acting on this information.
Source
Australian Taxation Office (ATO): Fixed Rate Method for Working From Home Expenses
https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/working-from-home-expenses/fixed-rate-method
