Fixed rate vs actual cost: which WFH method wins?
The ATO offers two methods for claiming work from home expenses. The right choice depends on how many hours you work from home and how high your actual bills are.
| Fixed rate (70c/hour) | Actual cost | |
|---|---|---|
| Best for | Most WFH employees | High expenses, dedicated office |
| Record keeping | Hours worked + 1 bill per expense type | Detailed records of all expenses |
| What's covered | Electricity, gas, phone, internet, stationery | Same + potential occupancy costs |
| Equipment | Claim separately (desk, chair, computer) | Claim separately |
| Complexity | Simple calculation | Complex apportionment |
The fixed rate method is ideal for most people. You claim 70 cents per hour worked from home, and this covers electricity, gas, phone, internet, and stationery costs. You can still claim equipment depreciation (desk, chair, computer) on top of this.
Choose fixed rate if you:
The actual cost method requires more work but may give a larger deduction if you have significant expenses. You calculate the actual work-related portion of each expense.
Consider actual cost if you:
Scenario: You work from home 20 hours/week for 48 weeks.
Fixed rate method
20 hrs × 48 weeks × $0.70 = $672
Actual cost method
Requires calculating work % of:
Total: $900
In this example, actual cost gives a higher deduction—but requires keeping detailed records and calculating each apportionment correctly.
Which WFH method gives a bigger deduction?
It depends on your expenses. The fixed rate method (70c/hour) suits most people and is simpler. The actual cost method may give a larger deduction if you have high electricity bills, a dedicated home office, or expensive internet. Calculate both and compare.
Can I switch between fixed rate and actual cost methods?
Yes, you can choose a different method each financial year. However, you must use the same method for all your WFH expenses within a single tax return. You cannot mix methods in the same year.
What if I only work from home part-time?
Both methods work for part-time WFH. With the fixed rate method, you claim 70c for each hour actually worked from home. With the actual cost method, you apportion expenses based on your work-use percentage and hours.
Do I need a dedicated home office to claim WFH deductions?
No, you don't need a dedicated room. You can claim WFH deductions if you work from any area at home, even a kitchen table. However, occupancy expenses (rent, mortgage interest) can only be claimed if you have a dedicated work area.
Tax Accuracy & Sources
Compares the ATO fixed rate (70c/hour) and actual cost methods for claiming work from home expenses. Equipment depreciation can be claimed separately under both methods. Occupancy expenses (rent, mortgage interest) require a dedicated work area and may have CGT implications.