Working From Home Deductions
There are two ATO-approved methods for claiming working from home expenses. The right choice depends on how you work and how well you keep records. This guide explains both methods, what each one covers, and how to calculate your deduction — so you claim what you're entitled to and nothing more.
First: can you claim at all?
To claim any working from home deduction you must:
- Be working from home to fulfil your employment duties — not just minor tasks like checking emails.
- Have incurred additional running expenses as a direct result of working from home.
- Have records to prove it.
The two methods at a glance
Fixed Rate Method
Simpler. Uses a set rate per hour.
From 1 July 2024 (FY2025 and FY2026)
How it works: Multiply total hours worked from home by 70c. That's your deduction for all bundled running expenses. You can still claim depreciation and other non-bundled costs separately.
- No dedicated home office required
- Straightforward record-keeping (hours only)
- Cannot also claim bundled items separately
Actual Cost Method
More work. Potentially a larger claim.
How it works: Calculate the actual work-related portion of every eligible expense. Requires more detailed records but may produce a higher deduction if your actual costs are significant.
- No dedicated home office required
- Must keep receipts and bills for every expense category
- Must calculate work-use percentage for shared expenses
- Can claim all eligible expenses in full (subject to apportionment)
What's included in each method?
The key difference: the 70c fixed rate bundles several expense types together. If you use the fixed rate, you cannot also claim those bundled items separately — doing so is a common mistake the ATO flags.
| Expense | Fixed Rate (bundled in 70c) |
Actual Cost (claim separately) |
|---|---|---|
| Electricity & gas — heating, cooling, lighting | ✓ | ✓ |
| Internet — home and mobile data | ✓ | ✓ |
| Phone — mobile and home phone usage | ✓ | ✓ |
| Stationery & computer consumables — printer ink, paper | ✓ | ✓ |
| Also claimable — separately under both methods | ||
| Depreciation of work equipment — computer, monitor, desk, chair Claim separately | — | ✓ |
| Repairs & maintenance of work equipment | — | ✓ |
| Cleaning of a dedicated home office | — | ✓ |
| Items ≤ $300 used mainly for work — immediate deduction | — | ✓ |
Depreciation — claimable under both methods
Regardless of which method you use, you can claim depreciation (decline in value) on work-related equipment you own — but only the work-use proportion. Common examples:
- Computer, laptop, tablet: if used 70% for work, claim 70% of the decline in value
- Monitor, keyboard, mouse, webcam
- Desk and office chair (if used exclusively or mainly for work)
- Items costing $300 or less used mainly for work can be written off in full in the year of purchase
- Items costing over $300 are depreciated over the asset's effective life
How the calculation works
Fixed Rate Method — example
Sarah kept a spreadsheet log of her hours throughout the year, recording start and finish times each day she worked from home. At year end, her log shows a total of 1,146 hours. She also claims depreciation on her laptop (purchased for $1,800, used 80% for work, effective life 3 years).
Actual Cost Method — example
Ben uses a dedicated spare room as his home office (10% of the home's floor area). He kept a timesheet throughout the year; his log records 1,763 hours worked from home. He used a 4-week representative diary to establish that 60% of his phone and internet use is work-related.
What about rent, mortgage interest and rates?
Occupancy expenses — very limited circumstances
Occupancy expenses (rent, mortgage interest, council rates, home insurance, land tax) are generally not deductible for employees working from home. They only become deductible in narrow circumstances where part of the home is:
- Set aside exclusively for business use (not also a bedroom, guest room, etc.)
- Has the character of a place of business — for example, clients regularly visit, or it's the principal place of business
⚠️ Claiming occupancy expenses also has capital gains tax implications — the partial business use of your home may reduce the main residence CGT exemption when you sell. Speak to us before claiming these.
Records you need to keep
The ATO is clear: estimates are not acceptable. You must keep contemporaneous records — written at the time, not reconstructed later.
🕐 Fixed Rate Method
- Record of actual hours worked from home for the entire year — timesheet, spreadsheet, diary or roster
- At least one bill/receipt for each bundled expense type you incur (e.g. one electricity bill, one internet bill) — to show you actually incur those costs
- Receipts for any equipment purchased for depreciation claims
📄 Actual Cost Method
- Record of actual hours for the entire year
- A continuous 4-week representative diary showing work-use percentage for shared expenses (phone, internet)
- All bills and receipts for every expense category you claim
- Basis of any apportionment (e.g. floor area calculation for electricity)
What you cannot claim
- Coffee, tea, milk or general household consumables
- Children's educational equipment (iPads, desks, subscriptions) — even if your employer would provide similar items at work
- Items provided by your employer (laptop, phone, headset)
- Mortgage repayments, rent, council rates, insurance (unless narrow occupancy criteria are met — see above)
- General home maintenance, cleaning of common areas
- Furniture or equipment used mainly for private purposes
- Phone or internet costs if you're already using the fixed rate method (double-dipping)
Not sure which method suits you?
We can run the numbers for you.
Bring your log of hours and any bills — we'll work out which method gives the better result and make sure you're not missing anything.