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PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home – ATO compliance approach
On 16 February 2023, the ATO released Practical Compliance Guideline PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home – ATO compliance approach (PCG 2023/1).
PCG 2023/1 revises the fixed rate method for calculating work-related additional running expenses incurred as a result of working from home (WFH). PCG 2023/1 should be read in conjunction with Taxation Ruling TR 93/30 Income tax: deductions for home office expenses, which explains when WFH expenses are deductible.
The revised fixed rate method apportions the following additional running expenses incurred on a fair and reasonable basis by using a fixed rate of 67 cents per hour for each hour they worked from home during the income year:
- energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while WFH
- internet expenses
- mobile and/or home phone expenses
- stationery and computer consumables.
From 1 July 2022, taxpayers may choose between either the actual cost method or the revised fixed rate method to calculate their deductions for expenses incurred while WFH. Under the revised fixed rate method, taxpayers may also separately claim the decline in value of any depreciating assets they used to WFH, and any other running expenses incurred as a result of WFH that are not included in the revised fixed rate method.
The fixed-rate method (52c per hour) outlined under ‘Special rules for home office running expenses’ in Law Administration Practice Statement PS LA 2001/6 Verification approaches for home office running expenses and electronic device expenses (PS LA 2001/6) will no longer be available for taxpayers to calculate deductions for their deduction for working from home expenses from 1 July 2022.
