Fixed rate WFH 67c “opaque and too demanding”
The tax profession is lining up to criticize the ATO’s revised work from home rules as being too demanding for taxpayers to justify and opaque in the way it calculated a flat rate of 67c.
The 67c per hour rate, which replaces the old pandemic shortcut method of 80c and the hybrid method rate of 52c, was the main change among a series of revisions to PCG 2022/D4 released this week. last.
The guidelines also included changes to substantiation requirements and a stricter record keeping requirement from next year.
BDO tax partner Mark Molesworth said the ATO’s method of arriving at the 67c rate was opaque and there was ‘no reconciliation with the temporary Covid measure of 80c an hour “.
“Even more concerning, if someone is to object to their assessment, the PCG appears to indicate that they will be required to properly substantiate the relevant costs,” he said.
“While this is technically correct, in the interest of good administration we would encourage the Commissioner to make a concession that he will not challenge those eligible for this method who even use it in case of objections and appeals.”
John Jeffreys Tax director John Jeffreys said the extra paperwork taxpayers had to keep would be a headache for accountants, with ‘actual records’ of the number of hours worked from home needed from the 1st January 2023.
“An estimate for the entire income year or an estimate based on the number of hours worked from home during a particular period and applied to the remainder of the income year will not be accepted,” he said. during a webinar.
“So even a full week’s performance or a 12-week performance won’t be enough. You should keep a day-by-day, even hour-by-hour record of what you have done.
“Now, is everyone going to do this? Well, your guess is as good as mine.
He said depreciation records were also tricky, with a four-week usage record for the equipment involved – laptop, printer, etc. – used as a basis for calculation.
H&R Block director of tax communications Mark Chapman said the PCG gives most people Hobson’s choice when it comes to working-from-home deductions.
“Claiming ‘real costs’ is not feasible for many taxpayers – the record keeping requirements are simply too high,” he said. ‘Therefore, for millions of people they will be forced to claim the flat rate of 67c an hour, which could lead to a reduction in the deduction and an increase in paperwork.’
He said the ATO revisions seemed reasonable “on the face of it”, but they had changed taxpayers and imposed new obligations.
“The amount that can be claimed is small and the compliance obligations are high – the taxpayer not only has to keep a record of the time spent working from home, but it is also necessary to keep an invoice/receipt for each of the additional costs, like an electric bill It’s new – there was never a need to use either of the old fixed rate methods.
HLB Mann tax partner Judd Peter Bembrick said the goal of simplicity had been missed.
“I think they complicate things, if anything. Simplicity is something we really want to see.
“So many people are working from home now – maybe it’s not a huge number of hours or maybe just certain periods, so we should make it as simple as possible.”