Important warning every Australian working from home needs to hear

Australians working from home could be putting their tax returns at risk if they fail to keep a diary of their scheduled hours.

H&R Block tax communications director Mark Chapman said the Australian Taxation Office is likely to require proof that someone has worked from home in the past financial year.

“We expect the ATO to check claims thoroughly, in particular to verify that taxpayers have a record of all their working hours throughout the tax year, in the form of timesheets, a diary or a copy of work schedules,” he told Daily MailAustralia. .

New rules came into effect in March 2023 requiring home workers to keep a diary of every hour they work from home in order to claim the flat rate of 67 cents per hour on their tax returns.

That would make 2023-2024 the first full financial year in which work-from-home time had to be recorded.

“If you don’t record all your hours at home from July 1 to June 30 – so for the entire tax year – you won’t be able to claim the flat rate of 67p per hour,” Mr Chapman said.

The lump sum method is much simpler than listing all the costs associated with working from home.

“This method is generally preferred by taxpayers because – other than the requirement to keep track of all your hours worked – the documentation requirements are much less stringent,” Chapman said.

Australians working from home could be putting their tax returns at risk if they fail to keep a diary of their scheduled hours

‘You simply declare 67 cents multiplied by the number of hours worked from home.’

The alternative is to declare the actual operating costs of working from home, from heating and cooling to energy bills, and calculate the portion of that that relates to working hours.

‘Alternatively, you can claim the actual operating costs of working from home, which only requires you to keep a four-week diary over a representative period,’ says Chapman.

‘However, you must also keep detailed substantiation (invoices, receipts, invoices) of all declared costs and a calculation showing how you have divided the costs between work use and private use.

“That’s a lot of paperwork and that’s why few taxpayers use the actual cost method.”

The flat rate of 67 cents per hour for WFH factors in internet and mobile phone bills.

Mr Chapman said this meant the tax authorities would crack down on ‘double dipping’ – the practice of claiming the flat rate and mobile phone charges – in a bid to recoup the $8.7 billion gap between what individuals are expected to pay in taxes and what they must pay. they actually pay.

New rules came into effect in March 2023 requiring home workers to keep a diary of every hour they worked from home in order to claim the flat rate of 67 cents per hour on their tax returns

“The ATO believes that work-related expense claims are the largest element of that ‘tax gap’ and have indicated they will be looking closely at these deductions this year,” he said.

Home workers are not allowed to claim mortgage interest repayments, rents or council taxes unless they are related to running a business.

Tax cuts

Since July 1, the revised phase three tax cuts have come into effect, benefiting 13.6 million taxpayers.

Those earning between $80,000 and $100,000 will receive $804 more per year in tax relief under Labour’s plan, compared to the former coalition government’s plan that was legislated with Labor support in 2019.

“The tax cuts put more money in the pockets of taxpayers, especially low- and middle-income taxpayers, and provided welcome relief from the rising cost of living,” Chapman said.

“Taxpayers don’t have to do anything to get the tax cut.

‘Employers have automatically adjusted the amount of tax they deduct from your wages, which means you would have immediately experienced an increase in net wages from July 1, 2024.’

But those earning more than $180,000 will get $2,346 less back in tax cuts.

Individuals have until October 31 to either file a 2023-2024 tax return or register with a tax agent to get an extension until May 15 next year.