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Work from home expenses and decline in value

Decline in value when you claim working from home expenses using the fixed rate method 52c or the shortcut method 80c.

Last updated 25 April 2023

Decline in value and the work from home method

Regardless of the work from home method you choose to use, depreciating assets continue to decline in value from when you buy them so it is important to keep records such as:

  • receipts of any depreciating assets you use while working from home
  • how you calculated your work-related use of the asset
  • your decline in value calculations.

For example, a $2,000 laptop with an effective life of 2 years will decline in value over the 2 years regardless of how much you use the asset for a work-related purpose or claim as a deduction.

Keeping records will ensure you can calculate the decline in value of your depreciating asset and claim a deduction for it in future income years if you change from using the temporary shortcut (80c) or fixed rate (52c) methods.

It will also allow you to claim a deduction for depreciating assets you start using for a work-related purpose that were previously used for a different purpose.

How decline in value works with the work from home methods

Depending on the work from home method you used in previous income years, the rate per hour may include your deduction for:

  • your additional running expenses
  • some or all of the decline in value for depreciating assets.

You can claim a separate deduction for the decline in value of depreciating assets if you use the actual cost method. If you have always used this method, you continue to calculate your decline in value deduction as you always have.

If you used the fixed rate method (52c) or the temporary shortcut method (80c) and purchased depreciating assets in an income year prior to 2022–23, you will need to keep records that show the cost of the asset and when you purchased it, to work out the decline in value of those depreciating assets.

The temporary shortcut method, covered all additional running expenses incurred as a result of working from home, including the decline in value of:

  • home office furniture and furnishings
  • phones
  • computers, laptops and other similar devices.

This meant there was no need to separately calculate the decline in value of these depreciating assets. However, the temporary shortcut method was only available for period from 1 March 2020 to 30 June 2022.

Under the fixed rate method (52 cents per hour worked) the decline in value of home office furniture and furnishings was included in the rate. However, you had to separately calculate the decline in value of depreciating assets such as a phone handset, computer, laptop or other similar device you use for work purposes.

The fixed rate method (52c) is not available for the 2022–23 income year or later income years.

For the 2022–23 income year on, the methods you can choose to calculate your working from home expenses (revised fixed rate method and actual cost method) allow you to claim a separate deduction for the decline in value of items used while working from home.

Start of example

Example: change in method

Colin an employee solicitor buys a new desktop computer for his home office on 1 July 2019 at a cost of $1,970. Colin only uses the computer when he works from home. He uses his laptop for private purposes and the other members of his household use their own personal devices.

During the 2019–20, 2020–21 and 2021–22 income years, Colin works from home for at least one day per week and keeps a record of the number of hours he works from home. In each of these years, Colin uses the all-inclusive shortcut method to calculate his deduction for his working from home expenses. As the shortcut method covers decline in value, Colin can't claim a separate deduction for the decline in value of his computer but he keeps the receipt for his desktop computer for warranty purposes.

In the 2022–23 income year, Colin continues working at home at least one day per week and keeping a record of the hours he works from home.

Although Colin can’t claim a separate deduction for the decline in value of his computer for the 2019–20, 2020–21 and 2021–22 income years, he will be able to claim a separate deduction in the 2022–23 income year. This is because he continues to use his computer when he works from home, he has kept the receipt for it and he can't use the shortcut method.

To claim a deduction, Colin must calculate the opening adjustable value (base value) of the desktop computer for the 2022–23 income year.

Colin uses the depreciation and capital allowances tool to work out the decline in value of his desktop computer using the diminishing value method, including the base value, for each year.

Diminishing value – desktop computer

Income year

Opening adjustable value

Decline in value

Adjustable value at the end of year

2019–20

$1,970.00

$987.70

$982.30

2020–21

$982.30

$491.16

$491.15

2021–22

$491.15

$245.58

$245.57

2022–23

$245.57

$122.79

$122.78

2023–24

$122.78

$61.56

$61.22

2024–25

$61.22

$30.61

$30.61

2025–26

$30.61

$15.31

$15.30

2026–27

$15.30

$7.65

$7.65

2027–28

$7.65

$3.84

$3.81

2028–29

$3.81

$1.91

$1.90

2029–30

$1.90

$1.90

$0.00

For the 2022–23 income year Colin's decline in value deduction for his desktop computer is $122.79.

End of example

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