Working from home remains a normal part of life for many Australians. Whether you work remotely full-time or split your week between home and the office, you may be able to claim eligible expenses when lodging your tax return.
For example, if you incur additional costs while working from home and meet the Australian Taxation Office (ATO) requirements, you can claim work from home tax deductions. The ATO allows taxpayers to calculate these claims using either the 70 cents per hour method or the actual expenses approach, with each method requiring a different way of calculating expenses.
No matter which option you choose, maintaining accurate records throughout the year is essential. Good record-keeping helps support your claim, makes tax time much easier, and allows you to claim the deductions you’re entitled to with confidence.
In this blog, we’ll explain how work from home tax deductions operate, compare the available claiming methods, outline the records you need, and cover common mistakes to avoid.
Work From Home Tax Deductions at a Glance
Before deciding which methods to use, it is important to understand how each option works. The ATO allows eligible taxpayers to calculate their deductions using either the fixed rate method or the actual cost method.
| Method | What it covers | Record required | Best for |
| Fixed Rate Method | Running expenses such as electricity, internet, phone usage and stationery | Record of hours worked from home plus evidence of expenses | Taxpayers wanting a simpler calculation |
| Actual Cost Method | Actual work-related portion of every eligible expense | Detailed receipts, bills, calculations and work-use records | Taxpayers with higher running costs and dedicated workspaces |
Both methods require evidence that you worked from home and incurred the expenses yourself. So, choosing the right option depends on your circumstances, the expenses you incur, and the level of record keeping you’re prepared to maintain.
Fixed Rate Method (70 Cents Per Hour)
The fixed rate method allows eligible taxpayers to claim a deduction based on the number of hours worked from home during the financial year. Instead of calculating every individual running expense, you can apply a rate of 70 cents for each hour worked from home.
This approach is designed to simplify the process while still recognising the additional costs that can arise when working remotely. It can be used whether you work from a dedicated home office, a spare room, the dining table or another suitable workspace within your home.
What the fixed rate covers
The hourly rate already includes a range of common running expenses associated with working from home. It covers:
- Electricity and gas used for heating, cooling and lighting
- Internet usage
- Mobile phone and home phone expenses
- Data costs
- Computer consumables
- Printer ink
- Stationery and similar supplies
Since these expenses are already included in the hourly rate, they cannot be claimed separately when using this method.
For example, if you use your personal mobile phone for work calls both at home and in the office, the portion relating to your home-based work is already included in the fixed rate calculation.
One of the reasons this method remains popular is that it reduces the need for detailed calculations across multiple expense categories. Taxpayers still need supporting records, but the overall process is generally easier than calculating every cost individually.
What you can still claim separately
Certain expenses can still be claimed in addition to the hourly rate, including:
- Decline in value of eligible assets
- Office furniture
- Computers and laptops
- Monitors and printers
- Repairs and maintenance for work-related equipment
For example, if an item costs $300 or less and meets the eligibility requirements, you may be able to claim an immediate deduction rather than claiming depreciation over several years.
The ATO expects taxpayers to maintain evidence showing ownership, purchase cost and work-related use of any assets claimed separately. Records should be retained for several years after the claim is made.
Unlike older temporary arrangements that existed during the pandemic, current rules place a stronger emphasis on maintaining evidence throughout the year. Accurate working from home records are essential if you intend to use this method.
To continue, taxpayers need to keep a record of all hours worked from home during the income year. Suitable evidence may include:
- Timesheets
- Rosters
- Work diaries
- Time-tracking applications
- Employer records
The ATO no longer accepts broad estimates of hours worked from home. Your records should reasonably demonstrate the hours claimed throughout the year.
Evidence of the expenses covered by the hourly rate is also required. Even though you are not claiming each running expense individually, you should still keep documents showing you incurred those costs. These may include electricity bills, internet invoices and mobile phone statements. If a bill is not in your name, additional evidence may be needed to show you paid your share of the expense.
This method suits people who want a straightforward way to calculate eligible deductions without completing detailed calculations for every household cost. It is particularly useful if your running expenses are relatively modest or your work pattern changes throughout the year.
Keep in mind that you cannot claim expenses your employer has already reimbursed. Similarly, costs that relate entirely to private use are not deductible. The ATO expects taxpayers to claim only the work-related portion of any eligible expense.
If you own equipment used for work, you may also be eligible to claim depreciation separately. The rules around depreciation can vary depending on the type of asset, its cost and how much it is used for employment purposes.
Choosing this method does not automatically mean you will receive the largest deduction. Every taxpayer’s circumstances are different, which is why comparing both options before lodging your return is worthwhile.
Actual Cost Method
The actual cost method allows you to claim the actual work-related portion of the expenses you incur while working from home. Instead of applying a single hourly rate, you calculate each eligible expense separately and claim only the percentage directly related to earning your income.
This approach usually involves more calculations and record-keeping, but it may produce a larger deduction if your running costs are higher.
Eligible home office expenses can include:
- Electricity used for heating, cooling and lighting
- Internet costs
- Home and mobile phone expenses
- Computer consumables
- Stationery
- Cleaning costs for a dedicated work area
- Decline in value of eligible equipment and furniture
- Repairs and maintenance relating to work assets
Every claim should reflect your actual work-related use. If an expense is shared between personal and work purposes, you can only claim the work-related portion.
For example, electricity expenses are generally calculated using your electricity tariff, the power consumption of the appliances you use while working, and the number of hours they operate during work time. Keeping accurate records of your working hours makes these calculations much easier.
The same principle applies to internet and phone expenses, which also need to be apportioned between work and private use. A representative diary kept over a reasonable period of at least 1 month can help establish your work-related percentage. If multiple people share the same internet connection, your claim should reflect only your own work-related use.
Some taxpayers may also be able to claim cleaning expenses, but these are generally available only if you have a dedicated workspace used for employment purposes. For example, if you regularly work from a separate home office, part of your cleaning costs may be deductible based on the area used for work.
In addition to these running expenses, you may be able to claim the decline in value of work-related assets, including furniture, computers, monitors and printers. Assets costing $300 or less may qualify for an immediate deduction if they meet the eligibility requirements.
This method involves claiming each expense individually, which is why good record-keeping is essential. Keep receipts, invoices, utility bills and supporting calculations for every expense you claim in case the ATO asks you to substantiate your deductions.
Pro tip: For more information on how the ATO assesses work-from-home claims, you can also read our guides on Working From Home ATO Review and ATO Hit List 2025, which cover areas that commonly receive additional scrutiny.
Which Method Should You Choose?
Selecting the right method comes down to your individual circumstances. Some taxpayers assume the hourly rate always produces the best outcome, while others believe claiming actual expenses guarantees a larger deduction.
Neither assumption is always correct. The best approach depends on your work pattern, household expenses and the quality of your records. If you’re unsure which option provides the better result, comparing both calculations before lodging your return can help you make an informed decision.
The fixed rate method may suit you if:
- You want a simpler way to calculate your claim.
- Your household running costs are relatively low.
- You prefer fewer calculations.
- You have reliable records of your hours worked from home.
The actual cost method may suit you if:
- You have a dedicated home office.
- Your electricity, internet and other running costs are relatively high.
- You purchased work-related equipment or furniture.
- You’re comfortable keeping detailed receipts and calculations throughout the year.
What Records Do You Need?
Accurate records are the foundation of a valid work-from-home claim. No matter which calculation method you use, the ATO expects you to keep evidence showing how each deduction was calculated and substantiated.
A practical checklist includes:
- A record of all hours worked from home.
- Receipts for work-related purchases.
- Electricity and gas bills.
- Internet bills.
- Mobile and home phone bills.
- Records for computers, desks, chairs and other depreciating assets.
- Calculations showing how work-related percentages were determined.
- Evidence of repairs or maintenance for eligible work equipment.
Your working from home records should be updated regularly rather than recreated at the end of the financial year. Timesheets, work rosters, employer records, diaries and time-tracking apps can all help demonstrate the hours you worked from home.
Most supporting documents should be retained for at least five years after lodging your tax return. Keeping organised digital copies of receipts and invoices can make retrieving information much easier if your claim is reviewed later.
Well-maintained records can also make it easier to compare different deduction methods and reduce the likelihood of mistakes when preparing your return.
Common Work From Home Claim Mistakes
Minor mistakes can reduce your deduction or result in questions from the ATO. So, try spending a little extra time while reviewing your claim before lodging your return to prevent unnecessary issues.
Some of the most common mistakes include:
- Estimating your work hours instead of keeping accurate records.
- Claiming expenses that have already been reimbursed by your employer.
- Claiming the same expense twice under different methods.
- Losing receipts or failing to keep supporting documents.
- Including private household expenses that are not work-related.
- Applying outdated tax rules that no longer apply.
Among these mistakes, double claiming is one of the easiest to overlook. For instance, if you use the fixed hourly rate method, you cannot separately claim electricity, internet or phone expenses that are already covered within that rate.
Another mistake taxpayers may make is claiming deductions for equipment supplied by their employer. If your employer owns the laptop, monitor or office furniture you use for work, you generally cannot claim depreciation for those items.
The ATO continues to review work-from-home claims as part of its compliance activities. So, keeping accurate records, using reasonable calculations and retaining supporting evidence can help substantiate your deductions if additional information is requested.
Who Can Claim Work From Home Expenses?
You may be eligible to claim working from home tax deductions in Australia if you meet the relevant ATO requirements and incur additional costs while performing your employment duties from home.
You may be able to claim if you:
- Work from home while earning employment income.
- Personally pay the eligible running expenses.
- Incur additional household costs because of your work.
- Maintain records supporting your claim.
You cannot claim if you:
- Receive reimbursement from your employer for the expense.
- Do not incur any additional running costs.
- Are claiming private expenses unrelated to your employment.
- Cannot provide evidence supporting your deductions.
Please note: Your eligibility depends on your work situation and expenses, not the number of days you work from home. Employees who work partly from home and partly from the office may still be able to claim if they meet the ATO requirements and keep proper documentation.
Example: Calculating Your Work From Home Deduction
Suppose Emma works from home three days each week and keeps accurate records throughout the financial year. Her timesheets display she worked a total of 780 hours from home.
Using the 70 cents per hour rate, her calculation is straightforward:
780 hours × $0.70 = $546.00
Meaning, Emma can claim $546.00 for the running expenses covered under the hourly rate, provided she meets the eligibility requirements and has retained evidence supporting her claim. If she also purchased an eligible office chair using her own money, that expense may be claimed separately where the tax rules allow.
This simple example shows why maintaining accurate records throughout the year makes preparing your tax return much easier.
Frequently Asked Questions
Can I claim the internet while working from home?
Yes, internet costs may be claimable if you use your connection for employment purposes while working from home. If you use the actual cost method, you can claim the work-related portion based on your usage records. If you use the fixed hourly rate, internet expenses are already included and cannot be claimed separately.
Can I claim electricity?
Yes. Electricity used for heating, cooling and lighting while you work from home may be deductible if you meet the ATO requirements. Under the hourly rate, these costs are already included. Under the actual expenses approach, you need to calculate and support the work-related portion using reasonable records.
Can I claim my desk and chair?
In many cases, yes. Desks, office chairs and similar equipment purchased for work may qualify for a deduction. Depending on the item’s cost and your circumstances, you may be able to claim an immediate deduction or claim the decline in value over several years.
Do I need a dedicated home office?
No. You do not need a separate study or dedicated office to use the fixed hourly rate. People who work from a dining table, spare room or another suitable area may still be eligible if they satisfy the ATO requirements. A dedicated workspace becomes more relevant when calculating certain expenses under the actual expenses approach.
Which method gives the biggest deduction?
There is no single answer because every taxpayer’s circumstances are different. The better option depends on your eligible expenses, work pattern and records. Comparing both calculations before lodging your return can help identify which method produces the most appropriate result for your situation.
What records do I need?
Keep records of the hours you worked from home, receipts for eligible purchases, utility bills, internet and phone accounts, and documents supporting any depreciation claims. Good records make it easier to prepare your return and provide evidence if the ATO asks you to substantiate your deductions.
Need Help Claiming Work From Home Tax Deductions?
Work-from-home tax rules can vary depending on your employment arrangements, the expenses you incur and the calculation method you choose. Understanding which deductions apply to your situation and keeping the right records can make the process much easier.
An experienced ITP tax accountant can help you assess your eligibility, identify the deductions you may be entitled to claim, and explain the differences between the fixed rate and actual cost methods. They can also help you review your records, understand ATO requirements and avoid common mistakes that may affect your claim.
Whether you’re preparing an Online Tax Return or need personalised tax advice, ITP Accounting Professionals can help you navigate the requirements for claiming work-from-home expenses. Our tax professionals can review your circumstances, explain your available options and help you prepare a claim that meets ATO requirements.
With experience across a wide range of tax matters, we can assist with choosing the most suitable calculation method, reviewing eligible expenses and keeping your documentation in order. If you’d like to discuss the revised fixed rate method and how it applies to your situation, call 1800 367 487 to speak with a member of the ITP team.