Work From Home Deductions
Tax deductions for expenses incurred when working from home, claimable using the fixed rate method or actual cost method.
Work from home deductions allow employees and business operators to claim tax deductions for expenses incurred when working from home. The ATO offers two methods: the fixed rate method (70 cents per hour, current from the 2024-25 income year under PCG 2023/1) and the actual cost method. The shortcut method (80 cents per hour) that applied during COVID-19 is no longer available.
The fixed rate method (70 cents per hour) covers electricity, gas, phone, internet, stationery, and computer consumables. You can claim additional deductions for items not included in the rate, such as the decline in value of office furniture (desk, chair), technology (computer, monitor, printer), and cleaning costs for a dedicated home office. You must keep a record of actual hours worked from home (a timesheet, roster, diary, or similar).
The actual cost method requires you to calculate the actual proportion of each expense attributable to working from home. This involves metering energy usage or apportioning bills based on floor area and hours of use. While potentially resulting in a higher deduction, this method requires significantly more detailed records. You must keep receipts for all expenses and maintain records showing how you calculated the work-related portion. For most employees, the fixed rate method is simpler and provides a reasonable deduction.
How it works
Working from home deductions let you claim a tax deduction for the extra running costs you incur because you work from home, using one of two ATO-accepted methods: the fixed rate method, currently 70 cents per hour under PCG 2023/1, or the actual cost method. The earlier 80 cents an hour shortcut method that applied during COVID-19 is no longer available, so anyone still assuming it applies is claiming under an outdated rule.
In practice, the fixed rate method covers electricity, gas, phone, internet, stationery, and computer consumables in a single hourly rate, and you claim it against a record of the actual hours you worked from home during the year — a timesheet, roster, diary, or similar. Items the fixed rate doesn't cover, such as the decline in value of office furniture and technology, are claimed as separate deductions on top of the hourly rate figure.
The alternative actual cost method requires calculating the real proportion of each expense attributable to work, typically by metering energy use or apportioning bills by floor area and hours of use — potentially a bigger deduction, but with a much heavier record-keeping burden. Either way, you must have genuinely incurred additional running costs because of working from home; if your employer already covers everything, such as providing equipment and reimbursing internet, there's nothing left for you to claim.
Example: a year of fixed rate method claims
An employee works from home for 800 hours across the income year, tracked through a simple timesheet, and doesn't buy any separate technology for the home office.
Using the fixed rate method, the deduction is 800 hours × 70 cents = $560, covering electricity, phone, internet, and stationery costs combined, with the timesheet as the supporting record.
Calculate it yourself
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Fixed Rate Method
A simplified method for claiming work from home expenses at 70 cents per hour, covering a range of running expenses.
Taxable Income
Your assessable income minus allowable deductions — the figure used to calculate your income tax.
Income Tax
Tax levied by the federal government on your taxable income, calculated using progressive tax brackets.
Uniform & Clothing Deductions
Tax deductions for buying, cleaning, and maintaining work-related uniforms, protective clothing, and occupation-specific clothing.
Self-Education Expenses
Deductions for education expenses that are directly related to your current employment or likely to increase your income in your current role.