Beginning next month, Australians who work from home will be compelled to record every hour spent on the job; accountants believe this would result in a $629 annual loss.
The tax office has declared that, beginning March 1, they would no longer accept estimates of the number of hours an individual worked from home, nor will they accept a four-week summary at the end of each month.
Those who claim phone and internet expenses on their tax return will no longer be able to claim a new set, flat rate of 67 cents per hour beginning on July 1.
According to accountants H&R Block and Johnston Advisory, this would result in an annual loss of $629 for the average work-at-home professional.
Tim Loh, an associate commissioner at the Australian Taxation Office, stated that professionals who worked from home would be required to maintain a log of their hours via a diary, timesheets, rosters, or employer computer log.
“Keep records regardless of the manner you employ,” he urged on Thursday.
This will provide you greater freedom to choose the technique that yields the most tax deduction based on your specific circumstances.
Mr. Loh stated that people affected would also be required to demonstrate that they were working from home “to fulfill your employment responsibilities, and not merely performing minor chores such as periodically checking email or answering calls.”
Mark Chapman, head of tax communications for H&R Block, stated that the changes would disadvantage Australians who work from home instead of the office.
This new fixed rate is obviously detrimental to the majority of taxpayers, he told the Daily Mail Australia.
In addition to a reduced deduction, there are substantially stricter recordkeeping requirements.
Ben Johnston, managing director of the accounting firm Johnston Advisory, stated that the new regulations will be an administrative surprise.
“These are significantly more burdensome requirements than you may be accustomed to,” he told Daily Mail Australia.
Tamara Burns, a chartered accountant at PB Taxation Services in Port Macquarie, stated that those who divide their week between home and the office will find the new restrictions particularly challenging.
New tax laws will leave the ordinary Australian $629 poorer per year.
EXISTING RULE: Fixed rate of 52 cents per hour for 1,095 hours of work at home per year ($569), plus mobile phone bills ($390), internet ($300), and stationary ($120), totaling $1,379 in average tax deductions.
NEW RULE: Fixed rate of 67 cents per hour for 1,095 hours of work from home per year ($734) with additional deductions for cleaning ($16) equals an average tax deduction of $750.
$629 poorer because people claiming phone/internet costs cannot claim a fixed rate.
Mark Chapman of H&R Block is the source for the new 67-cent-per-hour tariff that will take effect on July 1, 2023.
She stated, “The necessity to now report every hour worked from home imposes a significant administrative burden on the worker.”
The effect of this alteration is enormous.
There are numerous jobs in which individuals complete some work at home.
Ms. Burns stated that teachers who historically graded schoolwork at home would also be disproportionately affected.
She stated, “Teachers are a perfect example of a profession that would be significantly influenced by this rule.”
The fact that they must keep a record for 365 days of the year, as opposed to just four weeks, to justify their labor, on top of all the other work they are supposed to do, is the epitome of bureaucratic insanity.
Beginning on July 1, employees working from home will be eligible for a new hourly rate of 67 cents.
This will replace the previous rate of 52 cents per hour for individuals who additionally performed manual deductions, as well as the previous flat rate of 80 cents per hour that was permitted from March 2020, when the epidemic began, until June 30, 2022.
H&R Block and Johnston Advisory predicted that the modifications would result in an annual loss of $679 for the average WFH practitioner.
Under the current 52 cents per hour norm, a typical Australian working from home could claim a total tax deduction of $1,379, with this outgoing fixed rate allowing them to claim mobile phone and internet costs as well as stationary if they had receipts.
However, under the new 67-cents-an-hour rule, this amount drops to $700.
Even less than the $876 average of the now-discontinued 80-cent-per-hour flat rate when no receipts were required for the estimated cost of phone, internet, and electricity bills.
The new regulations prohibit someone from claiming the fixed rate for every hour worked from home if they also claim phone and internet bills manually.
Mr. Johnston explained, “Everything included in the fixed rate – energy expenses, internet expenses, mobile/telephone expenses, and stationery – can be claimed individually, but doing so disqualifies you from claiming the fixed rate.”
Therefore, if you wish to claim mobile phone expenditures individually, you may do so, but you cannot claim the fixed rate for any other expenses.
Mr. Loh contended that the 67-cent-per-hour fee was adequate to cover phone expenditures, which are required to be itemized under current regulations.
Included in the new rate are expenses such as phone, internet, and power that are difficult and time-consuming for ordinary Australians to calculate as work-related.
Mr. Johnston, though, stated that the new fixed rate, while greater than the previous 52-cent-per-hour rate, was subject to far tougher limitations.
He stated, “Do not believe the ATO propaganda doctors that this is an increase; it is not.”
For tax returns for 2022-23, the ATO will accept a four-week diary detailing the total number of hours worked from home between July 1, 2022 and February 28, 2023.
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