Work From Home Tax Deductions Guide

The Revised Fixed Rate Method

From 1 July 2022, the ATO introduced a revised fixed rate method. You can claim 67 cents per hour for every hour you work from home. This rate covers:

• Electricity and gas for heating, cooling, and lighting
• Phone and internet usage
• Stationery and computer consumables

You'll need to keep a record of the hours you work from home — either a timesheet, roster, diary, or similar document for the entire year.

The Actual Cost Method

If you want to claim the actual costs of working from home, you'll need to calculate the work-related portion of each expense individually. This includes:

• Electricity: Calculate the percentage of your home used for work and the hours worked
• Internet: Work out the percentage used for work purposes
• Phone: Keep a four-week diary to establish your work/personal usage ratio
• Office furniture: Depreciate items over their useful life (e.g., desk, chair, shelving)
• Computer equipment: Claim the work-related percentage of depreciation on laptops, monitors, printers

This method requires more record-keeping but can result in a larger deduction if your actual costs are high.

What You Can Claim on Top

Regardless of which method you choose, you can also separately claim:

• Depreciation on office furniture and equipment (under the actual cost method, or separately under the fixed rate method)
• Repairs to your home office equipment
• Cleaning costs for a dedicated home office

What You Cannot Claim

• Mortgage interest or rent (unless you run a business from home)
• Rates or insurance on your home
• General household items like coffee, tea, or toilet paper
• Costs related to children's education while working from home

Which Method Should You Choose?

The best method depends on your situation. If you work from home frequently and have high running costs (e.g., a dedicated office with significant electricity usage), the actual cost method may give you a bigger deduction. If you prefer simplicity and don't want to track every bill, the fixed rate method at 67c per hour is straightforward.

A qualified accountant can calculate both methods for you and advise which one delivers the best result.