How to Claim Working From Home Expenses on Your Australian Tax Return

When can you claim working from home expenses?

The Australian Taxation Office allows employees to claim eligible additional running expenses incurred while working from home. You must be working at home to fulfil your employment duties, not merely doing minimal activities such as occasionally checking emails or answering calls.

You must also incur additional running expenses because you work from home and have records supporting the claim. If an expense has both work and private use, only the work-related portion is deductible.

You cannot claim an expense your employer provides or pays for, or an amount your employer reimburses you for.

If you have not yet lodged your return, see how to lodge your individual tax return with myTax. If you discover an omitted or incorrect deduction after lodging, follow the separate process to amend your Australian tax return.

Fixed rate or actual cost: which method can you use?

The ATO provides two methods for calculating eligible employee working from home expenses: the fixed rate method and the actual cost method. Your records must support whichever method you use.

Fixed rate method

For the 2025–26 income year, the fixed rate is 70 cents per hour worked from home.

The fixed rate covers the work-related portion of:

• electricity and gas used for heating, cooling, lighting and other energy needs covered by the method;
• home and mobile internet or data;
• mobile and home phone usage;
• stationery;
• computer consumables such as printer ink.

You cannot claim a second deduction for expenses already covered by the fixed rate. You do not need a separate or dedicated home office to use this method.

Some expenses are not included in the hourly rate and may be separately deductible when the relevant conditions and record requirements are met. These can include the decline in value of depreciating assets used for work, such as computers and office furniture, and repairs and maintenance of those assets. Cleaning of a dedicated home office can also be outside the fixed rate.

Actual cost method

The actual cost method lets you claim the actual work-related additional expenses you incur because you work from home. Depending on your circumstances, these can include electricity and gas, phone and internet, stationery, computer consumables, decline in value and maintenance of work equipment, and cleaning of a dedicated home office.

You need detailed records and a reasonable calculation showing the work-related amount. Private use must be excluded. For example, when calculating actual electricity costs, the ATO requires records supporting factors such as the cost per unit of power, the appliance's power consumption and the hours it was used for work.

Records you need for the 70-cent fixed rate

For the fixed rate method, an estimate of how often you usually work from home is not enough. You need a record showing the actual hours worked from home during the income year, such as a timesheet, roster, diary, spreadsheet or similar record kept at the time you work or as soon as practical afterwards.

You must also have evidence that you incurred the expenses represented by the fixed rate. The ATO practical compliance guideline requires evidence for the relevant running expenses you incurred. For regular expenses, this can include an invoice, bill or credit card statement. For occasional stationery or computer consumables, keep an appropriate receipt.

If a household bill is not in your name, additional evidence may be necessary to show that you contributed to that expense. The ATO distinguishes sharing household expenses from simply paying board, which is generally a private arrangement.

Records for the actual cost method

The actual cost method requires records showing the additional running expenses you incurred and how you calculated the deductible work-related amount. Depending on the expense, this can include bills, receipts, invoices, usage records and calculations separating private use from employment use.

For some expenses, a representative usage record may be used to calculate the work-related proportion where the ATO rules permit it. You still need evidence supporting the expense itself and the calculation used.

In most cases, records supporting work-related expense claims must be retained for 5 years from the date you lodge your tax return.

Expenses you cannot claim

Working from home does not make ordinary private household spending deductible. The ATO specifically says you cannot claim items such as coffee, tea, milk and other general household items simply because you consume them while working from home.

You also cannot claim equipment or services provided by your employer, or expenses for which your employer reimburses you.

Employees generally cannot claim occupancy expenses such as rent, mortgage interest or home insurance merely because they work from home. Occupancy expenses are only potentially deductible in limited circumstances where the home has the necessary character of a place of business. This is different from ordinary home-working arrangements.

Computers, desks and other home office equipment

The fixed hourly rate does not include the decline in value of depreciating assets such as computers and office furniture. If you buy an asset yourself and use it to earn employment income, an eligible deduction may therefore be available separately.

The ATO states that eligible depreciating assets costing $300 or less may qualify for an immediate deduction where the applicable conditions are satisfied. For assets costing more than $300, you generally claim their decline in value over time rather than deducting the entire purchase price immediately.

If equipment is also used privately, only its work-related portion can be claimed. Equipment supplied by your employer is not your deductible expense.

Where to claim the deduction in your tax return

When lodging as an employee through myTax, working from home expenses are entered under Other work-related expenses. The ATO instructs taxpayers to include the calculation method in the description: either Fixed rate or Actual cost.

If you use the fixed rate method, enter the dollar amount of the calculated deduction rather than the number of hours worked from home.

You can use the ATO's myDeductions tool to keep records of work-related expenses and receipts and then use those records when preparing your return.

Common mistakes to avoid

• Do not estimate your annual work-from-home hours when the fixed rate method requires records of actual hours.
• Do not separately claim electricity, phone, internet, stationery or computer consumables already covered by the fixed hourly rate.
• Do not claim the private portion of expenses used for both work and personal purposes.
• Do not claim expenses your employer paid or reimbursed.
• Do not assume ordinary rent or mortgage interest becomes deductible just because you work from home.
• Do not confuse employee working from home rules with the rules for a sole trader operating a home-based business.

What applies to the 2025–26 tax return?

For the income year ending 30 June 2026, the ATO confirms that the working from home fixed rate is 70 cents per hour.

The ATO also states that the proposed $1,000 standard deduction for work-related expenses does not apply to the 2025–26 tax return. Claims for this income year continue to use the existing deduction and record-keeping rules.