Australian Tax Deductions for Working from Home 2024–25

For 2024–25, the ATO offers two methods for calculating working from home deductions: the revised fixed rate method (70 cents per hour) and the actual cost method. You must choose one method for each income year - you cannot mix and match within the same year.

The fixed rate method is simpler and does not require you to have a dedicated home office. The actual cost method is more complex but can produce a larger deduction if you have high work-related home expenses. Neither method allows you to claim occupancy expenses (rent, mortgage interest, council rates, home insurance) unless you pass the specific occupancy test.

The revised fixed rate is 70 cents per hour for every hour you work from home during the income year. This rate covers: electricity and gas costs for your home office area, internet costs (the work-related portion), mobile and home phone costs (the work-related portion), and computer consumables and stationery.

Because these costs are bundled into the 70 cent rate, you cannot claim them separately under the fixed rate method - no separate internet deduction, no separate phone deduction, no separate electricity bill claim. What you can still claim separately: the decline in value (depreciation) of equipment used for work (laptop, desk, chair, monitor, headset), and repair costs for that equipment.

Record-keeping for the fixed rate method has been tightened since the 2022 overhaul. You must maintain a record of the total number of hours worked from home for the full income year - not just a sample period. A diary, timesheet, or roster is acceptable. The ATO has removed the ability to use a four-week representative sample to extrapolate the full year's hours under the revised rules.

The actual cost method allows you to claim the actual work-related portion of each home expense separately. This requires more detailed record-keeping but can produce a significantly larger deduction for employees or self-employed individuals with high home running costs.

Claimable expenses under the actual cost method (with the work-related portion calculated for each): electricity and gas (apportioned by floor area of work area ÷ total floor area × hours worked from home as a proportion of total hours at home); internet (work-related data usage as a proportion of total household data, or a reasonable estimate); mobile and home phone (work-related call and data costs as a proportion of total use); cleaning costs for dedicated work area; decline in value of office furniture, equipment, and technology.

Apportionment is critical under the actual cost method. The ATO expects a reasonable basis for calculating the work-related portion of each expense - floor area, usage time, data consumption logs, or itemised phone bills. A rough estimate without substantiation may be disallowed on audit.

Occupancy expenses - rent, mortgage interest, council rates, land tax, and home building insurance - are generally not deductible for employees working from home. They are only deductible if your home qualifies as a 'place of business' - that is, you use a clearly identifiable area of your home exclusively and regularly for your work, you see clients or customers there, and your home is your primary place of business.

For most salaried employees working from home on days they would otherwise commute to the office, the occupancy test is not met - working from a dining table or spare bedroom, without exclusivity or client access, does not make that area a place of business.

Self-employed individuals and contractors with a home-based business and a dedicated space used exclusively for business purposes may meet the occupancy test. However, claiming occupancy expenses has a CGT consequence: when you sell your home, the portion of the home used for business is not eligible for the full main residence CGT exemption. This trade-off should be modelled before claiming occupancy expenses.

The ATO actively data-matches WFH deduction claims against declared income levels, employment type, and industry. Large WFH deductions in industries or roles where remote work is uncommon are more likely to be reviewed. The ATO also cross-references claims against employer provided benefits - if your employer reimburses your internet costs or provides a phone, you cannot also claim those costs as a deduction.

Common audit triggers for WFH deductions: deductions increasing significantly year-on-year without a change in working arrangements; claims for occupancy expenses by employees without a demonstrable place of business; claims for the internet deduction and also the full fixed rate (the fixed rate already includes internet); claims for 100% work use of assets that clearly have private use (family laptop, shared internet router).

The ATO uses pre-fill data from employers (via STP) and banks to benchmark WFH deduction claims. If your claim is significantly above average for your income level and occupation, it may be flagged for review. A defensible claim is one supported by records - not just a reasonable estimate.

The ATO requires records to be kept for 5 years from the date you lodge your tax return (or 5 years from the date of the relevant transaction, if later). For WFH deductions, records include: a log of hours worked from home (diary, timesheet, calendar FREE entries, or roster); evidence of each expense claimed (electricity bills, internet invoices, phone bills); evidence of work-related use (data usage logs, itemised phone records, equipment purchase receipts); and for depreciating assets, the date of purchase, cost, and proportion of work use.

The ATO does not require receipts for expenses under $10 (or total expenses under $200 in a year), but this low-value exemption does not extend to significant asset purchases or recurring bills. Keep all invoices and bills for any material WFH expense.

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Use this checklist before lodging your return:

• Decide which method to use: fixed rate (70c/hr, simpler) or actual cost (requires apportionment, potentially larger deduction)
• For fixed rate: confirm you have a full-year hours record - a diary, timesheet, or calendar. Four-week samples are no longer accepted
• For actual cost: calculate work-related proportion of each expense (electricity, internet, phone) using a defensible basis (floor area, usage logs)
• Do not double-claim: if using fixed rate, do not also claim internet, phone, or electricity separately
• Separately claim depreciation on work equipment (laptop, desk, chair, monitor) under either method
• If employer reimburses any expense, do not claim that expense as a deduction
• Check whether you meet the occupancy test before claiming rent, mortgage interest, or council rates - and if you do, model the CGT consequence
• Keep all records (bills, receipts, hours log) for 5 years from your return lodgement date

A registered tax agent can help you select the method that maximises your deduction and ensure your records are audit-ready.