Rate for home office expenses bumped up

The ATO has updated the hourly rate for calculating home office running expenses for the income year commencing 1 July 2018.
Tax&Compliance Reporter 23 January 2019

The home office running expenses hourly rate has been increased to 52c per hour, up from 45c per hour, effective from 1 July 2018.

The updated PS LA 2001/6 now reflects the change. The last time the rate changed was back in 2014.

The rate-per-hour method incorporates all of the items that a taxpayer can claim as a home office running expense including lighting, heating, cooling, cleaning costs, and decline in value of home office items such as furniture and furnishings in the area used for work.

Taxpayers who use the rate-per-hour method to claim a deduction for home office running expenses only need to keep a record to show how many hours they work from home, either over the course of the year or by keeping a record for a representative four-week period if their work hours are regular and constant.

Work-related expenses has been a key focus area for the Tax Office, with the first individuals not in business tax gap report revealing a $8.7 billion gap, driven primarily by work-related expenses.

According to the ATO, 51 per cent of all adjustments made were related to work-related expenses.

Among work-related expenses adjustments, the highest rate was for ‘other expenses’, in particular incorrect claims for home office, mobile phone and internet, contributing to 37 per cent of adjustments.