Work From Home Deduction

The work from home deduction lets employees claim running costs for working from home, usually via the ATO fixed rate of 70 cents per hour. It covers energy, internet, phone and stationery, and only counts if you kept a real record of your actual hours.

Payslip & TaxLast reviewed 2026-09-26

What it is

The work from home deduction is the ATO's way of recognising that your spare bedroom now heats, lights and connects itself in service of your employer. Since the 2024-25 income year, the main path is the fixed-rate method: you claim 70 cents for every hour you worked from home during the year. That single rate bundles electricity and gas, home and mobile phone, internet, stationery and computer consumables into one number, so you cannot claim those items separately on top.

The catch, and it is a serious one, is that you need a record of the actual hours you worked at home. Since the ATO's 2023 crackdown, estimates and representative four-week diaries are no longer accepted for the full-year claim — it wants timesheets, rosters, diary entries or similar contemporaneous logs covering the whole period. Keep one receipt per bundled category as backup evidence of the expenses themselves.

The alternative is the actual-cost method, where you apportion your real bills between work and private use, typically by floor area and time. It is more arithmetic, but it can beat the fixed rate for renters with heavy bills or big dedicated home offices. What employees generally cannot claim either way are occupancy expenses like rent or mortgage interest, and claiming them can trigger capital gains tax on your main residence, which is a very expensive lesson in deduction enthusiasm. Check the current rate and rules on ato.gov.au before lodging, as they shift.

Key takeaways

The fixed-rate method pays 70 cents per hour worked from home for 2024-25 onwards, up from the old 67-cent rate.
Actual hours must be recorded via timesheets, rosters or a running diary since estimates stopped being accepted in 2023.
The fixed rate bundles energy, internet, phone and stationery, so those cannot be claimed separately again.
Equipment and office furniture over $300 are claimed separately as decline in value on top of the fixed rate.
Rent and mortgage interest are occupancy expenses employees generally cannot claim, and doing so risks capital gains tax.

How it works

Under the fixed-rate method, the mechanism is one tidy multiplication. Tally every hour you worked from home across the financial year using contemporaneous records — rosters, timesheets, or a diary you actually maintained, not one reconstructed in June from your calendar and optimism. Multiply that total by 70 cents. A hybrid worker doing three days a week at home, roughly 22.5 hours a week across 46 working weeks, logs about 1,035 hours, which is a deduction of approximately $724.

On top of that fixed-rate figure you can still claim the decline in value of equipment and furniture, because assets are not bundled into the 70 cents. A $900 ergonomic chair depreciates over its effective life, and a $1,500 monitor setup the same, with the work-use percentage applied. Items costing $300 or less used mainly for work are immediately deductible in full, which is why the humble desk lamp gets better tax treatment than the fancy standing desk.

The actual-cost method swaps the flat rate for honesty and spreadsheets. You take your real electricity, gas, internet and phone bills, work out the work portion using floor area and hours, and claim that. It regularly wins for renters with poor insulation and full-time remote schedules, but you must commit to one method per year for those running expenses, and the record-keeping burden jumps considerably. The full eligibility criteria live at ato.gov.au and are worth reading before you pick a lane.

Why it matters

Remote and hybrid work shifted household running costs from your employer's ledger to yours, and this deduction is the only mechanism clawing some of that back. A full-time remote worker claiming 1,800 hours at 70 cents has roughly $1,260 of deductions, worth about $400 back at a 30% marginal rate — real money, but only with real records. Which brings us to Brent.

A colleague named Brent (yes, that Brent) claimed 40 hours a week for a full year, a heroic 2,080 hours, despite four weeks of annual leave, two of sick leave and a fortnight in Bali that his Instagram cheerfully documented. The ATO asked for his records, he offered a diary written in one uniform pen in late June, and the whole claim collapsed. He amended his return, repaid roughly $650 in refund plus interest, and now timestamps his diary like it is sworn evidence, which it effectively is.

The highest-leverage move is dead simple: log hours weekly, keep one power bill and one internet bill, and photograph receipts for any equipment over $300. Run your own hours through the work from home tax deduction calculator to compare the fixed rate against your likely actual-cost figure, then sanity-check the refund's effect on your pay with the take home pay calculator. Five minutes of arithmetic beats imagining a number in June.

Real-world examples

1. Hybrid worker: 24 hours a week at home, 46 working weeks

Three days a week at home at 8 hours each is 24 hours a week. Over 46 working weeks after leave, that is 1,104 hours. Multiplied by 70 cents, the running-cost deduction is about $773. At a 30% marginal rate plus the 2% Medicare levy, the refund uplift is roughly $247. Add a $280 desk lamp claimed immediately at work-use percentage and the total return creeps toward $340. All of it evaporates without an hours record, which is why the roster screenshot folder exists.

2. Full-time remote worker with a $1,400 sit-stand desk

Working 37.5 hours a week from home across 46 weeks is 1,725 hours, so the fixed-rate claim is about $1,208. The $1.4k desk is over $300, so it depreciates separately over its effective life — at roughly 10 years that is $140 a year, taking the total deduction to about $1,348. At a 30% marginal rate plus Medicare, the refund boost is around $431 a year. The energy, internet and phone bills are inside the 70 cents, so claiming them again would be double-dipping and a fast route to an amended return.

3. Renter comparing fixed rate to actual cost on winter-heavy bills

A renter in a draughty flat works 35 hours a week from home for 46 weeks, or 1,610 hours, giving a fixed-rate claim of about $1,127. Under actual cost, their extra winter heating, cooling and internet apportioned by floor area and time totals about $1,560, a win of roughly $433 in deductions, worth about $138 more refund at 32% including Medicare. The price of that $138 is apportioning every bill, keeping them all, and doing the floor-area maths defensibly. For most hybrid workers the fixed rate wins on sanity alone; run both through the work from home tax deduction calculator.

Common mistakes

Mistake: Estimating hours instead of recording them as they happen.

Why it bites you: Since 2023 the ATO requires actual records for the whole year, not a sample diary. Brent's reconstructed claim of 2,080 hours collapsed under a basic review, costing him roughly $650 in repaid refund plus interest.

Mistake: Claiming internet and phone bills on top of the fixed rate.

Why it bites you: Those costs are already inside the 70 cents, so claiming them again is double-dipping. A duplicated $900 phone-and-internet claim inflates a refund by roughly $290, which the ATO claws back with interest when noticed.

Mistake: Claiming rent or mortgage interest as an employee home-office expense.

Why it bites you: Occupancy expenses are generally not deductible for employees, and claiming them can expose part of your main residence to capital gains tax on sale — potentially thousands of dollars of CGT against a few hundred of deduction.

Mistake: Binning receipts for equipment because the fixed rate felt easy.

Why it bites you: The $1,400 desk and $400 monitor are still separately claimable as decline in value on top of the rate, worth roughly $180 a year in returns. No receipt means no claim, and that money just evaporates.

Ivy's take

I spent an evening reading the ATO's current fixed-rate ruling and the 2023 compliance crackdown notes so you don't have to, and the theme is consistent: the ATO is happy to pay you 70 cents an hour, and furious about hours that never happened. The money is not large enough to lie about and the records are not hard enough to skip. Log the hours weekly, the way adults log anything that matters, which is to say eventually and slightly resentfully.

I ran the numbers through four scenarios — hybrid, full-time remote, renter with monster bills, renter with nothing — and the fixed rate wins on convenience in most of them. Actual cost only pulls ahead when your bills are genuinely ugly. Brent insists his flat is a place of business, which is technically true the way a garage band is technically a record label. Claim the hours, depreciate the chair, leave the rent alone, and check ato.gov.au every June because the rate likes to wander.

Related jargon, defined

Fixed-rate method: Claiming 70 cents per hour worked from home, bundling energy, internet, phone and stationery.
Actual-cost method: Claiming the work portion of your real bills, apportioned by floor area and time.
Running expenses: Ongoing costs of working from home, like electricity, internet, phone and consumables.
Occupancy expenses: Costs of the home itself, like rent and mortgage interest, generally not claimable by employees.
Decline in value: The annual depreciation claim on equipment and furniture costing over $300.
Contemporaneous record: A log made as events happen, not reconstructed later; what the ATO now demands for home-working hours.

Frequently asked questions

What is the current ATO fixed rate per hour for working from home?+

It is 70 cents per hour for the 2024-25 year onwards, up from 67 cents previously. That rate bundles energy, phone, internet, stationery and basic consumables, so check ato.gov.au each July in case it moves again.

Can I estimate my hours if I forgot to keep a log?+

Not for the whole year — since 2023 the ATO requires actual records such as rosters, timesheets or a maintained diary covering the full claim period. A reconstructed estimate risks having the entire deduction knocked out, not just trimmed.

Can I claim a new desk or chair as well as the hourly rate?+

Yes, because equipment and furniture are not included in the fixed rate. Items over $300 are claimed as decline in value over their effective life, and items of $300 or less used mainly for work are generally deductible immediately.

Can I claim part of my rent while working from home?+

Generally no — rent and mortgage interest are occupancy expenses that employees cannot claim unless the home is genuinely a place of business. Claiming them can also create a capital gains tax problem on your main residence when you sell.

Is the fixed-rate or actual-cost method better?+

The fixed rate suits most hybrid workers because the record-keeping is light. Actual cost can beat it for full-time remote workers with genuinely heavy bills, but you must apportion every bill and keep them all, so run both through a calculator before committing.

Disclaimer: This information is general in nature and does not constitute financial or legal advice. Always consult a qualified professional for your specific situation.

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