The lighter side of ATO new WFH ruling

“There is one quirky aspect that will please parents of children who still live at home and work but do not contribute to household expenses,” Tony Greco said.

Mr Greco said an example of how the new WFH rulings will be applied will be comforting for parents of adult children still living at home.

He said it is contained in example 6 — not incurring additional running expenses.

The example talks about Sergei, who is employed as a graphic design artist. He works in the office three days per week and works from home two days per week. Sergei lives with his parents and when he works from home, he works in his bedroom using his employer-provided laptop and mobile phone. Sergei does not pay his parents any rent and he does not contribute to any of the household bills.

Additionally, although Sergei is carrying out his employment duties while working from home, he is not incurring additional running expenses.

Accordingly, Sergei is not entitled to a deduction for additional running expenses and he cannot rely on this guideline.

“Children might want to start contributing,” said Mr Greco. “Which is a silver lining for some parents.

“The ugly part of the Practical Compliance Guideline is that it does not exist in law [see opening para to the ruling repeated: https://www.ato.gov.au/law/view/document?DocID=COG/PCG20231/NAT/ATO/00001]

“This Practical Compliance Guideline sets out a practical administration approach to assist taxpayers in complying with relevant tax laws. Provided you follow this Guideline in good faith, the Commissioner will administer the law in accordance with this approach.

“If a taxpayer fails, the eligibility criteria there are no objectionable rights see para 6 which highlights this point in the PCG.

“What does this mean? Taxpayers who fail to keep the necessary documentation and records will be left to revert to the actual method which requires a dedicated home office space so in most cases will lose out on claiming the extra running costs they incur such as electricity, gas, internet.

“The concerns around the start date (1 March 2023) are real as many taxpayers will pay little attention to the revised rules thinking that the COVID 80¢ guidelines remain intact till the end of this financial year given the delay in finalising the new guidance.”