Work From Home Tax Deductions in Australia: The Complete Guide
Working from home in Australia? Learn exactly what you can claim, which method suits you, and how to avoid the most common ATO mistakes.
By Timothy Hirou GaschereauPublished 9 min read
Try it yourself
If your kitchen table has doubled as a desk for the past few years, you are not alone. Millions of Australians now work from home at least part of the week, and the ATO has a clear set of rules for what you can claim back at tax time.
The good news: there are legitimate deductions here, and they can add up to a few hundred dollars a year. The catch: the rules changed a lot in 2022-23, and plenty of people are still claiming the old way. This guide covers the current rules for work from home tax deductions in Australia, the two methods you can use, what you can and cannot claim, and the mistakes that get returns flagged. It is part of our tax series, and it is general information only, not tax advice.
🎯 The essential: You can claim the extra running costs of working from home using either the fixed rate method (70 cents per hour for 2024-25) or the actual cost method. You cannot use both for the same costs, you cannot claim rent or mortgage interest as an employee, and you must keep a record of every hour you work from home.
Can you claim working from home expenses?
Before you reach for the calculator, you need to pass three eligibility tests.
- You are genuinely working from home to do your job. Checking emails at 9pm or jumping on the odd call does not count. The ATO wants to see you performing substantive work tasks from home, the kind you would otherwise do at your employer's premises.
- You incur additional running costs. Working from home pushes up your electricity, your internet usage and your stationery supply. You are claiming the extra portion caused by working, not the whole bill.
- You keep records. This is where most people fall short. The ATO does not accept estimates or “I worked from home most Tuesdays.” You need actual records, and the type depends on your method.
The two methods: fixed rate vs actual cost
There are two ways to work out your deduction. Here is how they compare.
| Fixed rate method | Actual cost method | |
|---|---|---|
| What it covers | Energy, phone, internet, stationery, computer consumables | Every running cost you can apportion to work use |
| Rate (2024-25) | 70 cents per hour worked from home | Actual dollars, work-use portion only |
| Records required | A record of every hour worked from home, all year | Receipts for all costs, plus a representative diary |
| Who it suits | Most employees who want it simple | High actual costs or a big home setup |
Neither method lets an employee claim occupancy costs (rent, mortgage interest, council rates). More on that below.
The fixed rate method (70c per hour for 2024-25)
For the 2024-25 income year, the fixed rate is 70 cents for every hour you work from home. It was 67 cents per hour for 2022-23 and 2023-24, so always check the ATO's working from home page for the current-year rate before you lodge.
That 70 cents per hour is a bundle. It covers:
- Energy costs (electricity and gas used while working)
- Home and mobile phone (work-related calls and data)
- Internet (work-related usage)
- Stationery and computer consumables (printer ink, paper, pens)
Because phone, internet and electricity are already inside the 70c rate, you cannot also claim them separately. Adding a separate internet or phone claim on top is double-dipping, and it is the single most common reason the ATO adjusts a working from home claim.
What the fixed rate does NOT cover, so you can still claim these separately: the decline in value (depreciation) of equipment like a laptop, monitor, desk or chair, repairs to that equipment, and cleaning of a dedicated home office. You must also keep a record of the total hours you worked from home across the whole year. A spreadsheet, calendar or timesheet is fine. What no longer works is a 4-week diary: the ATO removed that option for this method from 1 March 2023.
The actual cost method explained
The actual cost method is more work, but it can produce a bigger deduction if your real costs are high. It runs in three steps.
- Identify your work-related running costs. Electricity, gas, phone, internet, stationery and consumables, plus the decline in value of equipment and furniture used for work.
- Work out the work-related portion. For electricity you might use the cost per kilowatt hour, the wattage of your devices and the hours used for work. For phone and internet you apportion by work use versus personal use.
- Keep receipts and a representative diary. You need actual bills and receipts for every expense, plus a diary covering a representative period (a 4-week diary is accepted for this method) to establish your work-use percentage.
This method suits people with a dedicated home office, high actual costs, or expensive equipment they want to depreciate at full value.
What you can and cannot claim
You CAN claim: the decline in value of work-related equipment (desk, chair, laptop, monitor, headset, webcam), repairs and maintenance of that equipment, cleaning of a dedicated home office (actual cost method only), and the additional running costs above via either method. An item costing 300 dollars or less and used mainly for work can be claimed in full in the year you buy it; items over 300 dollars are depreciated over their effective life.
You CANNOT claim (as an employee): rent, mortgage interest, council rates or home insurance (these are occupancy costs); coffee, tea, milk or toilet paper; general household furniture you would have bought anyway; and phone or internet on top of the fixed rate, because they are already bundled in. If a video suggests you can claim your mortgage as an employee, it is wrong.
A worked example
Meet Alex, a project manager who worked from home for 1,200 hours during 2024-25 and bought a 900 dollar desk and chair in October 2024.
| Item | Amount |
|---|---|
| Hours worked from home (2024-25) | 1,200 |
| Fixed rate deduction (1,200 x $0.70) | $840 |
| Depreciation on $900 desk and chair (pro-rated) | ~$90 |
| Total deduction | ~$930 |
Alex cannot also claim internet, electricity or phone on top of the $840, because those are already in the fixed rate. If Alex instead used the actual cost method and the real work-related running costs came to about $1,100, plus $90 depreciation, the total would be around $1,190. More paperwork, bigger result. For most employees the fixed rate is simpler and close enough. You can see how a lower taxable income flows through to your take-home pay with our salary and tax calculator.
Records you must keep
Good records are not optional. Here is what the ATO expects.
- Fixed rate method: a record of every hour you worked from home across the full income year (spreadsheet, calendar, timesheet or work-system log), plus receipts for any separately claimed items like equipment depreciation. Estimates and 4-week diaries are not accepted for this method.
- Actual cost method: receipts and bills for every expense, a diary covering a representative 4-week period showing your work-use split, and purchase records for any depreciation claims.
Keep your records for five years from the date you lodge. The ATO can review a claim years after the fact. If you have not been logging hours, start a simple spreadsheet today: it is the difference between a valid claim and a rejected one.
Common mistakes to avoid
- Double-dipping on phone and internet. Under the fixed rate they are already covered. Claiming them again is the most common WFH mistake the ATO sees.
- Estimating your hours. “About three days a week” is not a record. You need actual logged hours for the whole year.
- Claiming occupancy costs as an employee. Rent, mortgage interest and council rates are not claimable if you are on a payslip.
- Using the old 80c shortcut. It ended on 30 June 2022 and no longer exists.
- Forgetting to pro-rate depreciation. Buy a desk in January and you only claim the portion of the year you owned it, not the full year.
For the bigger picture on what else you can claim at tax time, see our guide to tax deductions for employees and how to lodge your tax return.
SnowLetter
Fresh snow in your inbox once a week: Australia's money news, quick tips, and our best reads.
❓ Frequently asked questions
Can I claim rent or mortgage repayments if I work from home?
+
No, not as an employee. Rent and mortgage interest are occupancy costs, and the ATO does not let employees claim them as working from home deductions, even if you have a dedicated home office. The rules are different for sole traders running a business from home, but if you receive a payslip, occupancy costs are off the table.
What is the fixed rate for working from home in 2024-25?
+
The fixed rate is 70 cents per hour for the 2024-25 income year. It was 67 cents per hour for 2022-23 and 2023-24. The rate can change between income years, so always confirm the current figure on the ATO website before you lodge.
Do I need a dedicated home office to claim?
+
No. You do not need a separate room set aside only for work. You can claim whether you work at the kitchen table, in a spare room, or on the couch. What matters is that you are genuinely performing work duties from home and incurring additional running costs as a result.
Can I claim my desk, chair or laptop?
+
Yes. You can claim the decline in value (depreciation) of work-related equipment and furniture under either method. Items costing 300 dollars or less that are used mainly for work can be claimed in full in the year you buy them. Items over 300 dollars are depreciated over their effective life.
Can I claim if I only work from home sometimes?
+
Yes. You do not have to work from home full-time. You can claim for the hours you actually worked from home, using whichever method you choose. Just make sure you keep a record of those specific hours.
What happened to the 80c shortcut method?
+
It is gone. The ATO's shortcut method (80 cents per hour covering all running costs) was a temporary COVID-era measure that ended on 30 June 2022. For 2022-23 onwards you must use either the fixed rate method or the actual cost method.
📚 Recommended reading
The Barefoot Investor
Scott Pape
The Barefoot Investor
Scott Pape
Australia's best-selling money book ever. A simple system for accounts, budgeting, debt and a real emergency fund in one.
Making Money Made Simple
Noel Whittaker
Making Money Made Simple
Noel Whittaker
Australia's classic, comprehensive money guide covering tax, super and investing, updated for today.
Sort Your Money Out and Get Invested
Glen James
Sort Your Money Out and Get Invested
Glen James
From the host of the my millennial money podcast, a step-by-step Aussie plan to fix your spending, clear debt and actually start investing. Practical and refreshingly free of finance-bro nonsense.
Some links above are affiliate links. If you buy through them, Snowball Invest may earn a small commission at no extra cost to you. We only recommend books we'd suggest anyway.
Sources
This article is general information only, not financial or tax advice. Working from home rates, methods and record-keeping rules change, and your circumstances are unique. Check the latest ATO guidance and consider a registered tax agent before you lodge.
Was this article useful?
General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
LinkedIn →Related articles
Tax Brackets Australia: How Marginal Tax Rates Actually Work
How tax brackets and marginal rates work in Australia. The 2024-25 brackets, a worked $90k example, effective vs marginal rate, and what Stage 3 changed.
The Tax-Free Threshold Explained ($18,200)
Australia's tax-free threshold is $18,200. Who can claim it, how to claim it from the right employer, what happens with a second job, and how to fix mistakes.
How to Lodge Your Tax Return in Australia (Step by Step)
Lodge your 2024-25 tax return via myTax or a tax agent. Deadlines, a step-by-step myTax walkthrough, refund timing, and what happens if you lodge late.