How to Claim Working From Home Deductions in Australia 2024-25

The ATO allows two methods for calculating working from home deductions. You can only use one method per income year, and you must satisfy the eligibility criteria for whichever method you choose.

• Revised Fixed Rate Method: 67 cents per hour for every hour worked from home - applicable from 1 July 2022 onwards (replacing the old 52c/hr and the temporary COVID 80c/hr rate)
• Actual Cost Method: claim the actual work-related portion of each home office expense - requires detailed records and a dedicated work area in your home
• You cannot 'double dip': if you claim the 67c/hr rate, you cannot also claim the phone, internet, stationery, or electricity costs separately - those are all bundled into the rate
• Under the 67c/hr method you CAN still separately claim depreciation on expensive items (computers, monitors, office furniture over $300) - these are not included in the rate
• The 67c/hr method does not require a dedicated home office - you can claim it if you work at a kitchen table, provided you keep a contemporaneous record of hours worked
• ATO myDeductions app or a diary/spreadsheet are acceptable records - estimate-based claims ('I work from home 3 days a week so I claim 3/5 of my year') are no longer accepted since July 2022

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The 67c/hr rate covers electricity, gas, internet, phone, stationery, and computer consumables. It does not cover depreciation of assets or occupancy costs.

• Calculate your deduction: hours worked from home × $0.67 - example: 40 hrs/week × 48 weeks = 1,920 hours × $0.67 = $1,286 deduction
• Record-keeping requirement from 1 March 2023: you must keep a record of actual hours worked from home for the entire income year - a 4-week representative diary is no longer sufficient
• Acceptable records: employer-approved WFH arrangement, time-tracking software logs, work calendar FREE entries, or a spreadsheet with date and hours - all must be kept for 5 years
• The rate covers: electricity and gas (home office proportion), internet (work proportion), mobile and home phone (work proportion), stationery and printer ink, computer consumables
• NOT included in the rate: decline in value (depreciation) of office furniture and technology; occupancy costs (rent, mortgage interest, insurance) - these must be claimed separately if using actual cost method
• You can switch methods between income years - choose whichever produces the higher deduction; you cannot switch mid-year

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The actual cost method allows you to claim the genuine work-related proportion of every home office expense. This typically produces a larger deduction but requires significantly more documentation.

• Electricity and gas: calculate home office floor area as a percentage of total home area, multiply by work hours as a percentage of total hours, then multiply by annual energy bills
• Internet: determine the work-use percentage of your internet plan - if you use the internet 60% for work and 40% personally, claim 60% of the annual cost
• Phone: use actual call logs or a 4-week representative period to determine the work-use percentage of your mobile and home phone bills
• Cleaning: if you have a dedicated home office, you can claim the proportional cost of cleaning that room - receipts required
• Occupancy costs (rent/mortgage interest): ONLY claimable if your home office is a place of business - i.e., clients visit, or the office is exclusively set aside for work and not used for personal purposes. Claiming occupancy costs triggers a CGT main residence exemption reduction
• Dedicated work area requirement: the actual cost method works best if you have a separate room used only (or primarily) as an office - without this, occupancy and cleaning claims become difficult to justify

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Computers, monitors, desks, chairs, and other equipment used for work can be depreciated separately under either method. The rules differ depending on the cost of the item.

• Items costing $300 or less: claim the full cost as an immediate deduction in the year of purchase (work-use percentage applies - a $250 keyboard used 80% for work = $200 deduction)
• Items costing over $300: depreciate over the effective life determined by the ATO - laptops 2-3 years, desktop computers 4 years, office chairs 10 years, desks 10 years
• Diminishing value method: most common; 200% ÷ effective life in years = depreciation rate applied to the declining balance each year
• Prime cost method: cost × (days held ÷ 365) × (100% ÷ effective life) - produces equal annual deductions over the effective life
• Immediate deduction for small business owners (SBE): if you run a small business from home with turnover under $10 million, you can use the instant asset write-off for eligible depreciating assets
• Work-use percentage must be applied to all depreciation calculations - a $2,000 laptop used 70% for work generates $1,400 of depreciable value; depreciation is claimed on $1,400, not $2,000

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Many WFH claims are adjusted or disallowed by the ATO due to eligibility errors or inadequate records. These are the most common pitfalls.

• You must actually incur the expense - you cannot claim electricity costs if your employer reimburses your power bills
• Domestic expenses are not deductible - coffee, tea, snacks, home internet if used primarily for personal streaming, general household furnishings not in the home office
• Employers who pay WFH allowances: you must declare the allowance as income AND claim deductions separately - the allowance is not a tax-free reimbursement unless specifically structured as one
• Casual employees and contractors working from client sites: you may have minimal WFH hours - be accurate in recording only genuine at-home work time
• Travel to a regular workplace: your commute is not deductible, even if you sometimes work from home. The first trip from home to a work site is private travel
• ATO data matching: the ATO cross-references WFH claims against employer records, ABS survey data, and industry benchmarks - unusually high claims trigger review

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With good record-keeping and the right method selection, WFH deductions can meaningfully reduce your tax. Here are practical steps to maximise your legitimate claim.

• Start tracking hours now - download ATO myDeductions or set up a spreadsheet on 1 July each year; retrospective records (reconstructed at tax time) carry more audit risk
• Keep all receipts for home office equipment - even items under $300 require a receipt or bank statement as evidence
• Compare both methods at tax time: run the numbers on 67c/hr vs actual cost - for many taxpayers earning $80,000+ working 3-4 days from home, the actual cost method including equipment depreciation produces a higher deduction
• If your employer issues a WFH policy or approval email, save it - this is evidence of your entitlement to work from home and supports your deduction claim
• Ask your employer for a letter confirming WFH arrangements if your industry has been under ATO scrutiny (financial services, consulting, IT, professional services)
• At 37% marginal rate, $3,000 in legitimate WFH deductions saves $1,110 in tax - the record-keeping effort is well worth it

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