Employer deductions with a work from anywhere workforce
Managing a remote or hybrid workforce in 2022?
What costs employers are obligated to cover – and what they’re not
Tax deductions can get complicated for employers with a remote workforce. Know the rules and changing pandemic exemptions to optimise your tax and stay on the ATO’s good side.
More employers navigating remote work
Almost half of businesses have staff working remotely. It’s up to 44% from a pre-pandemic 20% of businesses.
If you’re an SME managing the complexities of a remote or hybrid workforce, it’s important to stay compliant with employer obligations across costs, deductions, and tax.
Let’s take a look at:
- Remote work expenses — what employers pay for (and what they don’t)
- Employer deductions
- The ATO’s three golden rules
- Fringe Benefits Tax (FBT) in 2022.
Who pays for what when work goes remote?
Typically, employers cover the costs of:
- Office equipment — like computer hardware and devices
- Tools required for staff to fulfil their work duties, such as:
- Business-specific software like graphic design or accounting programs
- Marketing, sales and project management systems
- Audio and visual conferencing devices and software.
Encourage your employees to keep a log book of work-related expenses if they want to claim a proportion of costs as deductions on
their personal tax return.
Employees generally cover their own costs for:
- Running a home office — their rent or mortgage, and running costs
- Office furniture
- Internet connection and networking.
What employers are eligible to claim as deductions
- Home office equipment: Desktop computers, laptops, monitors, printers, phones and web cams.
- Tools required to fulfil work duties: Business-specific software or hardware.
- Fringe benefits: The cost of any fringe benefit you provide and the associated FBT.
Remote work on the ATO radar
Three golden rules outline what the ATO accepts as a valid business deduction:
- The expense must have been for the business, not for private use.
- If the expense is for a mix of business and private use, only the portion that is used for the business is claimable.
- The taxpayer must have records to prove it.
FBT exemptions changing in 2022
Your company may be managing Fringe Benefits Tax (FBT) for the first time in the context of remote or hybrid work. If you’ve provided employees with new benefits because of Covid-19, including items that enable work from home, you’re probably paying some FBT.
It’s important to be across what exemptions and concessions — particularly those related to Covid-19 — that may have changed or ended between tax years.
What’s exempt from FBT?
Laptops, portable printers and other electronic devices are generally exempt from FBT if they’re primarily used by your employees for work.
This is where a log book of personal and work use comes in handy.
The minor benefits exemption applies to minor, infrequent and irregular benefits under $300. The otherwise deductible rule allows for the taxable value of an expense payment benefit to be reduced to nil. They may apply if your business:
allows employees to take home electronic equipment normally used in the workplace
provide stationery products or computer consumables like toner
pay for employee phone and internet access.
Skill up staff to avoid double dipping
A 2022 priority for the ATO is to target taxpayers claiming expenses that have already been reimbursed by their employer.
ATO Assistant Commissioner, Tim Loh, said, “A mistake that we often see in tax returns is people claiming expenses twice. Remember, we use sophisticated data analytics to monitor for incorrect information and you risk being audited or penalised for deliberately providing incorrect information.”
Communicate with your staff around costs and deductions to ensure they understand what they can claim, and set clear boundaries around expenses.
Reduce risk with your accountant
Remote workforce deductions are still new to a lot of businesses. There's a lot to get your head around if your team has worked remotely on and off through the year, or have shifted to remote-first.
The right expert support means your business stays compliant, doesn’t leave deductions on the table, and keeps up with new and evolving Covid-related exemptions. Getting help with your tax is an expense your business can claim.
Get expert eyes on your remote workforce deductions.
Contact us at Sheridans Chartered Accountants.