Australians who use their mobile phone for work will no longer be able to conveniently claim the costs back on tax when they do their return this year.
With the end of the financial year just nine days away, accountants are warning those working from home to be prepared to be $1,300 a year worse off when it comes to getting deductions under new tax rules.
The Low and Middle Income Tax Offset has also been axed, which will stop middle and average income earners getting up to $1,500 in relief.
That means the typical working Australian, during a cost-of-living crisis, stands to get back almost $3,000 less in relief compared with last year.
With wages failing to keep pace with inflation, Australians hoping to maximise their tax refund will now have to spend more time doing their return – manually adding up their receipts – if they do not choose the new, less generous shortcut method.
Australians who use their mobile phone for work will no longer be able to conveniently claim the costs back on tax when they do their return this year (stock image)
The Australian Taxation Office quietly changed the rules late last year so phone, internet, electricity and stationery costs will no longer be claimable as deductions for someone who uses an approved shortcut method.
The easy method of letting professionals claim 80 cents an hour for all the time they worked from home – without having to produce phone, internet and electricity bills – expired on June 30 last year.
But it wasn’t until November that the tax office announced a new 67-cent-an-hour rate would be introduced and backdated to July 1, 2022.
Under this new rule, those who use this shortcut when doing their tax returns for the 2022-23 financial year won’t be able to manually claim phone, internet, electricity and stationery costs.
Previously, professionals working from home could claim a flat rate of 52 cents an hour and claim a percentage of telecommunication and home office costs, based on actual costs.
The new 67-cent-an-hour rule has replaced both the flat 80-cent-an-hour rate and the lower 52-an-hour rate for those who wanted to manually add up their phone and energy bills – which is set to leave work-from-home professionals $1,300 a year worse off.
H&R Block director of tax communications Mark Chapman said the new 67-cent-an- hour fixed rate would stop professionals from being able to manually claim mobile and home landline phone costs, internet connection, stationery, and electricity and gas bills.
‘For the first time, phone usage and internet expenses are included in the fixed rate method,’ he told Daily Mail Australia.
The Low and Middle Income Tax Offset has also been axed, which will stop middle and average income earners getting up to $1,500 in relief (pictured is Treasurer Jim Chalmers with his wife)
‘Note that under the new rules, if you use your mobile phone for work purposes when you are out and about, as well as at home, you can no longer claim a separate deduction for this use and still use the fixed-rate method.
‘No additional deduction for any expenses covered by the rate can be claimed if you use this method.’
Those who want to claim their work-related phone costs will no longer be able to do that on top of an old 52-cent- an-hour rate – leaving them worse off.
‘These were previously excluded from the fixed-rate method, which allowed a separate deduction to be claimed for these expenses,’ Mr Chapman said.
‘If you wish to claim actual use of your mobile phone – or home internet – you must claim using the actual method for all working from home expenses.’
H&R Block calculated that someone working from home for a year, under the old 80-cent rule, would typically get a deduction of $1,536.
This increased to $2,618 under the axed 52-cent rule, because someone could claim mobile phone, internet and stationery manually.
But under the new 67-cent-an-hour rule, that fell back to $1,286.40, as these items would not be claimable anymore.
That equates to a difference of more than $1,300 a year comparing the new method with the existing 52-cent method.
Those working from home will also be required to keep a diary of every day worked from home since March 1, 2023.
The tax office will accept a four-week summary covering July 1 to February 28.
The Low and Middle Income Tax Offset expired on June 30 last year which means nothing for those earning up to $126,000.
Those earning $48,000 to $90,000 won’t get back $1,500 like they did last year.
That previously included the $1,080 and the one-off $420 cost-of-living bonus.
‘Many taxpayers won’t cotton on to that fact until they come to lodge this year’s tax return and they notice that the size of their refund has dramatically shrunk,’ Mr Chapman said.
The Australian Taxation Office quietly changed the rules late last year so phone, internet, electricity and stationery costs will no longer be claimable as deductions if someone wanted to use a shortcut method (pictured is assistant commissioner Tim Loh)
