Working-from-home deductions: what you can actually claim

If you work from home — even a couple of days a week — you're probably entitled to claim running costs at tax time. The ATO gives you two ways to do it, and the difference between them can be a few hundred dollars a year.

The two methods

The fixed rate method pays 70 cents per hour worked from home (the rate since 1 July 2024). That single rate covers electricity and gas, internet, phone usage, stationery and computer consumables. You can't claim any of those separately on top — but you can separately claim the decline in value of equipment like a desk, chair, monitor or laptop.

The actual cost method does what it says: you claim the work-related portion of every expense — energy, internet, phone, cleaning, consumables — plus depreciation on equipment. It usually produces a bigger claim, and always produces more paperwork: you need records showing the work-use percentage of each cost.

What the fixed rate is worth

Two days a week at home for 48 weeks is about 730 hours — roughly $511 at the fixed rate. A full-time remote worker on 38 hours over 48 weeks reaches about 1,824 hours — roughly $1,277. What that saves you at tax time depends on your marginal rate: at 30% plus the Medicare levy, a $1,277 deduction returns about $409.

The records the ATO actually checks

The fixed rate method has one non-negotiable requirement: a record of the actual hours you worked from home across the whole year — a diary, timesheets, or a roster. An estimate ("I usually do two days a week") isn't accepted. For equipment claims and the actual cost method, keep receipts and note your work-use percentage.

The three golden rules for any deduction: you spent the money yourself and weren't reimbursed; it directly relates to earning your income; and you have a record to prove it.

Which method should you use?

Run both numbers. If your home internet, phone and energy bills are high and your work-use share is genuine, actual costs often wins — especially for full-time remote workers. If you'd rather not keep every bill, the fixed rate is simple and safe. Whichever you choose, the hours log is worth keeping either way, because you can pick the better method when you lodge, not before.

What you can't claim

Rent, mortgage interest, council rates and home insurance are off-limits for employees working from home (they're "occupancy expenses", generally only claimable if your home is a genuine place of business). Coffee, snacks and anything your employer reimbursed are out too.