Is the new 2022 ATO announcement bad news for tax payers in Australia?

ATO Announcements Bad News For Tax Payers In Australia

With the Covid era finally coming to an end or almost to an extent. Many Australians have adapted the new hybrid method of working from home, attending virtual meetings & conferences. While Australia has now gained its momentum. The Australian Taxation Office is revising some serious changes after ato announcements. Effective from 1st July 2022, the “Shortcut Method” is no longer an option for the Australian taxpayers. Should the new guidelines be adapted as a part of your 2023 tax returns? Under the new proposed guidelines, Australians working from home will not be able to claim certain expenses such as electricity, internet, mobile separately using the shortcut method. For those, who are not aware of the shortcut method, it is a form of temporary guideline or calculation used by the ATO (aka Australian Taxation Office) to work out an Australian taxpayers' deductions for working from home, between 1 March 2020 and 30th June 2022. This method was a simplified tool, where individuals could claim up to 80 cents per hour for every hour an individual worked from home. The shortcut method covered all your expenses that incurred while you worked from home, such as internet, phone, data, decline in furniture and equipment value, gas, electricity, lighting and even cooking. As per the ATO website, there are two types of methods you can use for calculating your work from home expenses.

The fixed rate method

While, the fixed rate claims 52 cents for each hour an individual worked from home. This rate also includes the running expenses that are incurred for electricity, cooling, gas, and lighting.

Actual cost method

The actual cost method claims the deduction for actual expenses an individual incurs when they work from home. However, the difference here is that to use this method, taxpayers must claim actual expenses by keeping records, incur additional running expenses, and spend money on depreciating assets an individual buys, while working from home. An important difference here to keep in mind that an individual does not incur additional running expenses if other household members are in the same room as the individual (and are NOT working from home). While the shortcut method has been eliminated, the actual cost method would require people to fill out some heavy and boring paperwork, else they could claim the 67 cents flat rate shortcut method. As per our director, Mr. Kaleem Ulah,“the above two methods are tedious and may involve either using a flat rate (which means the fixed rate method), where you could potentially be losing $$$ or you could be spending a lots of time in your boring paper work, to use the second method – which is the actual cost way.” Kaleem also says, “if you are working from home, make sure you keep at least one monthly or quarterly invoice for the expense you incurred as evidence for running expenses” Are you an employee working from home? And still have questions? Speak to our tax accountants in Adelaide today. With over 8 plus offices, The Kalculators is a team of chartered accountants in Adelaide, Port Augusta, and Whyalla. Whether you are looking to start your own business or your own trust fund. Feel free to give us a call on 08 7480 2593 or send us an email on info@localhost