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The ATO should have postponed its revisions to the work-from-home claims regime until next financial year, says H&R Block.
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Most taxpayers ‘will be in the dark’ about WFH changes
17 February 2023
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10 minute read
Most taxpayers will fail to notice the ATO publicity campaign about changes to work-from-home deductions and will learn about them when they do their tax return after July, says the director of tax communications at H&R Block Mark Chapman.
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He said the ATO should have postponed the revised record-keeping requirements until next financial year rather than start them in two weeks.
“It isn’t appropriate or fair to introduce rules in February, backdated to the previous July,” he said.
“Even allowing for the revised date of the transitional record-keeping requirements (taxpayers must only have a full record of their working from home hours from 1 March), many taxpayers will simply be unaware of the change of the change until they visit their tax agent.”
He said an ATO publicity campaign would be unlikely to get the message home.
“Most taxpayers will, sadly, be left unmoved by the ATO’s publicity campaign and the campaign itself will go unnoticed.
“While the ATO might believe that a press release and a few interviews will do the trick, the fact is that most taxpayers only become aware of tax at tax time – by which time it will be far too late for them to comply with the more stringent record keeping requirements set out in this PCG.
“Even then, for any taxpayers who don’t have an accountant, they could be in for a big surprise if they prepare their return via myTax in the same way they did last year – and they could be opening themselves up to an audit as a result.”
CPA Australia senior manager tax policy Elinor Kasapidis said the ATO’s education campaign would need be effective because around 5 million people claimed WFH deductions during the pandemic and the 80c-an-hour shortcut method was popular.
“Some Australians will still be under the impression they can claim a work-from-home deduction in the same way as they did during the height of the pandemic,” she said.
“Australians will need to keep an ongoing diary for each day of the year they work from home from March onwards. A four-week diary representative of the year isn’t going to cut it. They also need to keep some records about their expenses incurred while working from home, such as copies of utility bills.
“The ATO has a big job ahead to ensure Australians are aware of their obligations.”
CA ANZ tax leader Michael Croker welcomed the retention of two deduction methods, but said the 67c rate was “bad news”.
“Clients will naturally ask why the ATO switched-off the previous 80c-per--hour method and agents will need to explain the difference about what's covered by the 67c calculation,” he said.
“The big mistake some clients make is to do a back of the envelope per hour deduction calculation which goes something like this: ‘There's 365 days in the year, subtract weekends, public holidays, annual and sick leave, then assume I worked (say) three out of five days from home for seven hours a day, multiply that by 67c’.
“That's not acceptable to the ATO, which expects individuals to keep records of the time spent working from home and the household running expenses.”
“Start keeping those diaries now.”
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