The tax profession is queueing up to criticise the ATO’s revised work-from-home rules as too demanding for taxpayers to substantiate and opaque in the way it calculated a fixed rate of 67c.
The 67c-an-hour rate, which replaces the previous pandemic shortcut method of 80c and the hybrid method rate of 52c, was the headline change among a raft of revisions in PCG 2022/D4 released last week.
Also in the guidance were changes to substantiation requirements and a requirement for tighter record-keeping 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 to the temporary Covid measure of 80c an hour”.
“Most concerningly, if an individual needs to object against their assessment, the PCG seems to indicate that they will be required to properly substantiate the relevant costs,” he said.
“While this is correct from a very technical standpoint, in the interests of good administration we would encourage the Commissioner to make a concession that he will not take issue with individuals eligible for this method using it even in the case of objections and appeals.”
The director of John Jeffreys Tax, John Jeffreys, said the additional documents taxpayers needed to keep would prove a headache for accountants, with “actual records” of the number of work-from-home hours necessary from 1 January 2023.
“An estimate for the entire income year or an estimate based on the number of hours you work from home during a particular period and applied to the rest of the income year will not be accepted,” he said on a webinar.
“So, not even a full week representation or a 12-week representation will be sufficient. You must keep a day-by-day, even hour-by-hour record of what you've been doing.
“Now, will everybody 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 relevant equipment – laptop, printer and so on – used as the basis for calculation.
Director of tax communications at H&R Block Mark Chapman said the PCG gave most people Hobson’s choice when it came to work-from-home deductions.
“Claiming ‘actual costs’ isn’t feasible for many taxpayers – the record-keeping obligations are just too high,” he said. “Therefore for millions of people, they will be forced to claim the 67c an hour fixed rate –which could result in a lower deduction and increased paperwork.”
He said the ATO revisions looked sensible “on the face of it” but short changed taxpayers and imposed fresh obligations.
“The amount that can be claimed is low and the compliance obligations are high – the taxpayer not only needs to keep a record of times spent working from home, but also there is a need to keep an invoice/receipt for each of the additional costs, such as an electricity bill. This is new – it never used to be necessary using either of the old fixed rate methods.”
Tax partner at HLB Mann Judd Peter Bembrick said the goal of simplicity had been missed.
“I think they make it more complicated, if anything. Simplicity is something that we really want to see.
“So many people are working from home now – it may not be a huge number of hours or maybe just certain periods, so we should be making it as easy as possible.”
reference： https://www.accountantsdaily.com.au/tax-compliance/17791-wfh-67c-fixed-rate-opaque-and-too-demanding
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