What can you claim for your home beauty salon after ATO latest changes?

The ATO (you got to love them, right?) has made some changes to what you can claim from working from home (e.g. if you have a home salon) and this is very important for you to know!

For beauty therapists and trainers who complete any or all working hours from home, the shortcut method to completing a tax return is no longer available.

The below changes are meant to better reflect contemporary working from home arrangements.

In case you didn't know it, there are two methods to claim WFH deductions which are either "actual cost" or "fixed rate". The recent changes apply only to the latter one. The new method applies from 1 July 2022 and applicable to this financial year.

Remember that to claim any deductions related to WFH, you must be working from home to fulfil your employment duties i.e. not just checking emails or carrying out minimal tasks.

No matter which method you use, make sure to keep records. This will give you more flexibility to choose the method that gives you the best deduction at tax time depending on your circumstances.

Assistant Commissioner Tim Loh said that ‘Items that are difficult and tedious for everyday Aussies to calculate actual work-use, like phone, internet and electricity expenses, are included in the revised rate. Assets and equipment that typically give taxpayers a bigger deduction, such as technological items and office furniture, are not included in the revised rate and need to be claimed separately.’

‘Another benefit is that you no longer need a dedicated home office to use the fixed rate method.’ This wouldn't applied as much to home beauty salons as you would have a gorgeous and welcoming space for your clients!

Ok now I am borderline bored, so Ari can you please tell me what those changes are? I'm getting there! 😂

• From 1 July 2022 to 28 February 2023, the ATO will continue to accept a record which represents the total number of hours worked from home (for example a 4 week diary). However, from 1 March 2023 onwards, taxpayers will need to record the total number of hours they work from home.

What's the new "Rate"?

The cents per work hour has increased from 52 cents to 67 cents.

Wonderful... now what's covered under this rate?

It covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables. No additional deduction for any expenses covered by the rate can be claimed if you use this method.

Ok so, what can I claim separately?

• The decline in value of assets used while working from home, such as computers and office furniture.
• The repairs and maintenance of these assets.
• The costs associated with cleaning a dedicated home office.

Important: 

• Taxpayers need to keep a record of all the hours worked from home for the entire income year – the ATO won’t accept estimates, or a 4-week representative diary or similar document under this method from 1 March 2023.
• Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.
• Records must be kept for each expense taxpayers have incurred which is covered by the fixed rate per hour (for example, if taxpayers use their phone and electricity when working from home, they must keep one bill for each of these expenses).

If you like this blog article, leave us a comment below and share it with your colleagues!

With Love, Ari xx

Disclaimer: This is not formal tax advice and only to be taken as a guide only. Please always have the advice from a professional accountant.

Source: 

• ATO website. Click here to see the whole article.