Working From Home Tax Deductions 2025: Complete ATO Guide

Two Methods for WFH Deductions

Fixed Rate Method

67 cents/hour

Simpler records, set rate

Actual Expenses Method

Calculate actual costs

More records, potentially higher

Method 1: The Fixed Rate Method (67 cents/hour)

The revised fixed rate method is the simpler option for most people. You claim 67 cents for each hour you work from home.

What's Covered by the 67 Cents?

Electricity and gas for heating, cooling, lighting
Home and mobile phone usage
Home internet
Stationery and computer consumables

What You Can Claim Separately (on top of 67c)

Depreciating assets: Computer, desk, chair, monitor (work-related portion)
Repairs and maintenance: For dedicated work equipment
Cleaning: If you have a dedicated home office

Fixed Rate Example

Sarah's WFH Deduction Calculation

Hours worked from home: 1,200 hours/year (about 3 days/week)

Fixed rate claim: 1,200 × $0.67 = $804

Plus laptop depreciation: $400 (work portion)

Plus desk depreciation: $80

Total WFH deduction: $1,284

Record-Keeping for Fixed Rate

You must keep records of:

Hours worked from home: Timesheets, roster, diary, or time-tracking app
Invoices/receipts for any items claimed separately (computer, desk, etc.)
One record of phone and internet expenses (to show you have these costs)

Important: Hours Tracking

You can no longer use a 4-week representative diary to estimate hours for the whole year. You must track all hours worked from home. Use a digital timesheet or app.

Method 2: Actual Expenses Method

If you have high running costs or a dedicated home office, the actual expenses method may give you a larger deduction—but requires significantly more record-keeping.

Categories of Actual Expenses

Running Expenses

• Electricity (work % of total bill)
• Gas (heating/cooling portion)
• Phone (work % of usage)
• Internet (work % based on usage)
• Stationery and consumables

Depreciating Assets

• Computer/laptop (work portion)
• Office furniture (desk, chair)
• Monitor, keyboard, mouse
• Printer
• Webcam, headset

Occupancy Expenses*

• Rent or mortgage interest
• Council rates
• Home insurance
• Land taxes

*Only if you have a dedicated office with area method

Other Costs

• Cleaning (dedicated office)
• Repairs to office equipment
• Curtains/blinds (work area)
• Work-related subscriptions

Calculating Work-Related Portion

For shared expenses like electricity, you need to calculate the work-related portion:

Expense	Calculation Method
Electricity/Gas	(Office area ÷ Total home area) × (Work hours ÷ Total hours)
Phone	4-week diary of work vs personal calls, apply %
Internet	Reasonable estimate of work usage (e.g., 50% if WFH 3 days/week)
Computer	Depreciation × Work use % (keep usage diary)

What You Can NOT Claim

Non-Deductible WFH Costs

✗ Coffee, tea, snacks, or meals while working from home
✗ Childcare costs (even if you need it to work)
✗ Your entire internet or phone bill (only work portion)
✗ Occupancy costs without a dedicated home office
✗ Items provided by your employer
✗ Items reimbursed by your employer

Depreciation on Work Equipment

Items costing more than $300 must be depreciated over their useful life. Items $300 or less can be claimed immediately (at the work-use percentage).

Item	Effective Life	Annual Deduction*
Laptop computer	4 years	25%
Desktop computer	4 years	25%
Computer monitor	5 years	20%
Office desk	10 years	10%
Office chair	10 years	10%
Printer	5 years	20%

*Prime cost method rate. Multiply by work-use % for actual claim.

Which Method Should You Choose?

Decision Guide

Choose Fixed Rate (67c/hour) if:

• You don't have a dedicated home office
• You work from home occasionally or hybrid
• You want simpler record-keeping
• Your running costs are average

Choose Actual Expenses if:

• You have a dedicated home office (occupancy claim)
• You have high electricity/gas costs
• You work from home full-time
• You can maintain detailed records

Quick Comparison Example

Tom works from home 3 days/week (1,200 hours/year) and has:

Item	Fixed Rate	Actual Expenses
Running costs	$804 (1200 × 67c)	$580 (calculated)
Laptop depreciation	$300	$300
Desk/chair depreciation	$100	$100
Total	$1,204	$980

In this case, the fixed rate method gives a better result.

Record-Keeping Tips

Essential Records to Keep

Time log: Hours worked from home (digital timesheet or app)
Receipts: All equipment, furniture, stationery purchases
Bills: Phone, internet, electricity (at least one of each)
Usage diary: 4-week diary for phone/data if using actual expenses
Floor plan: If claiming occupancy for dedicated office

Keep records for 5 years from the date you lodge your tax return.

ATO Audit Triggers

The ATO has indicated WFH claims are an audit focus area. Avoid these common mistakes:

Claiming without tracking actual hours worked from home
Claiming 100% of equipment when also used personally
Double-dipping: claiming both 67c rate AND internet/phone separately
Claiming occupancy costs without a dedicated home office
Claims that don't match your employer's records of WFH arrangements

Hybrid Workers: Special Considerations

If you split time between office and home:

Only claim hours actually worked from home (not total work hours)
Equipment depreciation is based on total work use (home + office)
You can claim different days each week—just track accurately
Travel between home and office is generally not deductible (commuting)

Final Thoughts

Working from home deductions can add $800-2,000+ to your tax return when claimed correctly. The key is maintaining good records throughout the year—don't try to reconstruct at tax time.

Use our Income Tax Calculator to see how WFH deductions affect your overall tax position.

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