If you’ve been working from home, even just a couple of days a week, there’s a good chance your work from home tax deductions aren’t claiming everything you’re entitled to.

The shift to hybrid and remote work hasn’t slowed down since the pandemic, and neither have the questions about what you can actually claim. The good news? The ATO allows genuine work from home deductions for Australians who work from their kitchen table, spare bedroom, or that corner of the lounge you’ve optimistically called your “office.” The not-so-good news? The rules around how you calculate those deductions have changed, and getting it wrong could mean missing out… or worse, attracting unwanted attention from the ATO.

So, when it comes to WFH Tax, let’s break down exactly what you can claim, what you can’t, and how to pick the right method for your situation.

Work From Home Tax: Fixed Rate Method vs. Actual Costs

Since 1 July 2022, the ATO has offered two ways to calculate your work from home tax deductions: the revised fixed rate method and the actual cost method. The old “shortcut method” (80 cents per hour for everything) ended on 30 June 2022, so if you’re still thinking that one applies, it doesn’t.

The WFH Tax Fixed Rate Method

This is the simpler option. You claim a set rate for every hour you work from your home office:

• 2024–25 income year: 70 cents per hour
• 2022–23 and 2023–24: 67 cents per hour

That hourly rate covers your electricity and gas, phone and internet usage, stationery, and computer consumables like printer ink. It’s designed to bundle up the expenses that are genuinely tricky to calculate individually.

One thing people love about this method: you don’t need a dedicated home office. Working from the dining table absolutely counts.

But here’s the catch — if you use the fixed rate method, you can’t separately claim those bundled expenses elsewhere on your return. No double-dipping, as the ATO puts it.

You can still claim additional deductions on top of the fixed rate for things like the decline in value (depreciation) of your office furniture, computer equipment, and repairs to those items. More on that shortly.

The Home Office Actual Cost Method

If you’re willing to put in a bit more effort with your record-keeping, the actual cost method lets you claim the real work-related portion of every individual expense. That means calculating your actual electricity usage, your actual internet costs, your actual phone bills, and working out exactly what percentage relates to work.

This method often produces a larger deduction, especially if you work from home frequently or have high running costs in your home office. But it requires significantly more documentation, and you’ll need to be able to justify your work-use percentages if the ATO comes knocking.

You’ll also need a dedicated home office space if you want to claim occupancy expenses like a portion of your rent or mortgage interest under this method, though most employees can’t claim occupancy expenses at all (that’s more relevant for sole traders running a business from home).

What You Can Claim When You Work From A Home Office

Regardless of which method you choose, you can claim the work-related portion of:

• Computers, laptops, and monitors – either an immediate deduction if the item costs $300 or less, or depreciation over its effective life if it’s more than $300
• Office furniture like desks and chairs (same $300 rule applies)
• Repairs and maintenance to your work equipment
• Work-related software and subscriptions

Just remember: if you use an item for both work and personal purposes (and let’s be honest, most of us do), you can only claim the work-related portion. Telling the ATO your gaming laptop is 100% for work is a bold strategy that’s unlikely to end well.

What You Can’t Claim in Your Work From Home Tax Return

This is where people tend to get creative, and where the ATO tends to get interested. When it comes to work from home tax, you cannot claim:

• Coffee, tea, milk, and snacks — yes, even though your employer provides them at the office. Your flat white habit is on you.
• General household expenses that you’d pay regardless of working from home, like your mortgage (unless you’re a sole trader with a dedicated office — and even then, there are CGT implications to consider)
• Children’s education expenses like iPads and desks purchased for schooling
• Items your employer has already provided — if your company gave you a laptop, you can’t claim depreciation on it
• Expenses your employer has reimbursed — if they’ve already covered it, it’s off the table

Home Office Record-Keeping:

Here’s where a lot of WFH tax deduction claims fall apart. The ATO has made it very clear: no records, no claim.

For the fixed rate method, you need:

• A record of every hour you worked from home for the entire income year — timesheets, rosters, a diary, or a log of when you accessed your employer’s systems all count. The key word is contemporaneous — you need to record it as it happens, not reconstruct it from memory in June.
• At least one bill for each expense category covered by the fixed rate (e.g., one electricity bill and one internet bill to prove you actually incurred those costs).

For the actual cost method, you’ll need all of the above plus detailed records of every expense you’re claiming and a reasonable basis for calculating the work-related portion.

The ATO’s myDeductions tool can help you track expenses throughout the year, which is a lot less painful than scrambling through a year’s worth of emails looking for receipts the week before your tax return is due.

Which Method Should You Choose?

There’s no one-size-fits-all answer, and the best method depends on your situation. As a general rule:

• Choose the fixed rate method if you want simplicity, you don’t have a dedicated home office, or your running costs are relatively modest.
• Choose the actual cost method if you work from home frequently, you have high energy or internet costs, and you’re diligent about keeping records.

It’s worth running the numbers both ways to see which gives you a better result. The ATO’s home office expenses calculator is a handy starting point.

Don’t Leave Money on the Table

Work from home tax deductions are one of the most commonly claimed (and most commonly misclaimed) items on Australian tax returns. The ATO has flagged WFH expenses as a key focus area, which means getting it right matters more than ever.

If you’re unsure which method suits your situation, or you want to make sure you’re claiming everything you’re entitled to without overstepping, it’s worth talking to someone who knows the rules inside and out.

At HPartners, our accounting team helps clients across Brisbane and beyond sort through their individual and business tax returns, including making sure your home office deductions are accurate, compliant, and maximised. Whether you’re an employee splitting your week between home and the office, or a sole trader running your business from home, we can help you get it right.

Book a chat with the HPartners team today and make sure your next WFH tax return works as hard as you do.

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