The BIG change coming to your tax return if you work from home and not everyone will like it

Australians who work from home will no longer be able to claim a shortcut method when they put in their tax return next year.

Since the pandemic began in March 2020, professionals have been able to claim a flat 80 cent-an-hour rate for their expenses instead of having to manually add them up.

The shortcut was meant to have ended on June 30, 2021 but the Australian Taxation Office extended it for another year as Sydney and Melbourne were placed into long lockdowns.

With Delta outbreaks no longer forcing people to work from home, from July 1 the convenient 80-cent an hour method will no longer be available.

Instead, those working from home will be required to keep their electricity, internet and phone bills and manually add up their expenses to claim a lower 52-cent an hour deduction.

Tax agent H&R Block’s director of tax communications Mark Chapman said those still working from home would need to get into a habit of keeping their receipts.

‘It does mean from the first of July, basically taxpayers are going to have to be much more prepared,’ he told Daily Mail Australia.

‘They’re going to have to have it at front of mind that they need to keep copies of their documentation.

‘You don’t want to get to this time next year and you suddenly realise, “Oh, I’ve not kept copies of any documentation therefore I’m not potentially going to be able to claim”.’

The existing 80-cent an hour rule will still be available for those filing their tax return for the 2021-22 financial year.

‘If you’re doing your tax return for this year, you don’t need to worry about it,’ Mr Chapman said.

‘If you relied on that 80-cent rate, you’re going to face a large adjustment as we move into the new tax year because you will have to keep considerably more records.’

Mr Chapman said the tax office made the wrong decision to axe the convenient but temporary 80-cent an hour method, even though it typically yielded a smaller return and therefore put less pressure on government revenue.

‘I certainly don’t think it was too costly because it usually produced a lower deduction so it was probably advantageous to the ATO,’ he said.

‘The ATO takes the view that the pandemic is over. 

Australian Taxation Office assistant commissioner Tim Loh said a new method was likely to announced later this year for those working from home

‘If the ATO does think that everyone’s going to be heading back to an office, they’re probably mistaken.’ 

Australian Taxation Office assistant commissioner Tim Loh said a new method was likely to announced later this year for those working from home. 

‘We are looking to modernise the working from home methods for the 2022-23 financial year and we will consult as we always do and expect to be able to provide information about this later in the calendar year,’ he said.

H&R Block calculated those using the 52-cent an hour method, on average, yielded tax refunds of $2,600 compared with $1,100 for those who used the outgoing 80 cent an hour method.

From July 1, those working from home seeking a tax refund will need to use the 52-cent an hour fixed cost method and add up their expenses for lighting, heating or cooling their work area in the home and a depreciation in the value of their furniture.

But depreciation on computers and mobile phones have to be submitted manually under the actual cost method.

Individuals have until October 31 to lodge their tax returns for 2021-22.

Tax agent H&R Block’s director of tax communications Mark Chapman said those still working from home would need to get into a habit of keeping their receipts (pictured is a Zoom room in a NSW home)