People who work from home will need more detailed records to claim expenses after the shortcut method ends in July and tax agents should start telling clients, said the IPA.
The general manager of technical policy at the IPA, Tony Greco, said the shortcut method of claiming WFH expenses was one of the few remaining ATO COVID support measures and greatly reduced the administration required when compared to alternative methods.
Introduced in March 2020 when the pandemic first prevented people from commuting, the shortcut method only requires a taxpayer to keep a record of hours worked without having to detail additional expenses.
The rate is 80¢ an hour and worth around $1,500 a year to an average taxpayer, according to the ATO, but will not be extended after 30 June.
“Each taxpayer in the home could independently claim this deduction at the same time and in any part of the home,” Mr Greco said.
“With so many workers still either working entirely from home or under a hybrid model, its demise will increase the administrative challenge of taxpayers trying to claim home office expenses from 1 July.”
The ATO said that 80¢-an-hour claims are all-encompassing and include phone, internet, declines in the value of equipment or furniture, and electricity or gas for heating, cooling and lighting.
“You can’t claim any other expenses for working from home, even if you bought new equipment,” the ATO said.
The ATO has left the change largely unpublicised although references to the shortcut method on its website confirm it ends after this financial year.
Mr Greco said accountants should start warning clients that future claims will need to meet stricter documentation requirements while the ATO web page suggests keeping receipts for depreciating assets or equipment, plus records of how the work-related use of an asset and its decline in value has been calculated in case these need to be calculated later.
The ATO is believed to be working on revisions to WFH claims, which may affect the fixed rate and actual costs methods still in place after July.
The fixed-rate method allows taxpayers to claim 52¢ an hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus the work-related portions of phone and internet expenses, computer consumables, stationery, and the decline in value of a computer, laptop or similar device.
The actual cost method, which involves the most administration, allows a taxpayer to claim the actual work-related portion of all running expenses, documented and calculated “on a reasonable basis”.