Quick answer
The simplest way is the ATO fixed rate method: 70 cents for every hour you work from home, covering energy, phone, internet, stationery, and computer consumables in one rate. You need a record of the actual hours you worked from home across the year and one bill for each running expense. The actual cost method is an alternative that can be larger but needs a full apportionment.
Are home office expenses tax deductible in Australia?
The additional running costs of working from home are deductible; the fixed costs of owning or renting the home usually are not. The ATO splits home-based costs into running expenses (energy, phone, internet, consumables, and the decline in value of equipment) and occupancy expenses (rent, mortgage interest, council rates, house insurance).
Employees can claim running expenses but generally cannot claim occupancy expenses, because that requires the home to be a genuine place of business, which also exposes part of the home to capital gains on sale. Sole traders running a business from home have more scope to claim occupancy costs, with the same capital gains consequence. See the wider Australian expense rules for how this fits the broader deduction picture.
How much can you claim?
You choose one of two methods each year:
| Method | What it covers | Records needed |
|---|---|---|
| Fixed rate | 70c per hour: energy, phone, internet, stationery, consumables | All hours worked from home + one bill per expense |
| Actual cost | The work-related portion of each actual running expense | Every bill, plus a work-use apportionment |
Under the fixed rate you can still separately claim the decline in value of office furniture and technology. Worked example. An employee works from home 1,000 hours in 2025-26. The fixed rate claim is 1,000 x 70c, which is $700, plus the depreciation of a $900 desk and monitor claimed over their effective life. She cannot also claim her internet bill on top, because the 70c rate already includes it.
Record-keeping requirements
The fixed rate method requires a record of the total hours you actually worked from home for the entire income year, not an estimate or a representative four-week period. A timesheet, roster, diary, or time-tracking app is acceptable. You also need at least one bill for each of the running expenses the rate covers, to show you incurred that type of cost. The ATO requires records to be kept for five years. Under the actual cost method you must keep every bill and your apportionment workings.
How to claim, step by step
- Decide whether you are claiming as an employee or a sole trader.
- Keep a record of every hour you work from home across the year.
- Choose the fixed rate (70c per hour) or the actual cost method, whichever gives the better result.
- Under the fixed rate, multiply your hours by 70c and keep one bill per running expense.
- Separately claim the decline in value of office furniture and equipment.
- Record the deduction in your tax return and keep your hours record and bills for five years.
Common mistakes
- Estimating hours or using an old four-week sample. The fixed rate now needs a full-year record.
- Claiming internet, phone, or power on top of the 70c rate. Those are already included.
- Claiming rent or mortgage interest as an employee, which the ATO almost always disallows.
- Forgetting to separately claim depreciation of desks, chairs, and computers under the fixed rate.
- Not keeping a single bill for each running expense, which invalidates the fixed rate claim.
Software that helps
Most home office claims fall over because the hours record and the bills are not kept together through the year.
- WFH Logbook style apps record your work-from-home hours for the fixed rate method.
- ExpenseFlow captures your energy, phone, and internet bills, codes each with the correct GST treatment, and syncs them to Xero, so the records behind a home office claim sit in one place rather than a drawer.
- ATO myDeductions logs hours and expenses in the ATO app and prefills your return.
FAQ
See the answered questions above for the 70c rate, the hours record, rent and mortgage, claiming furniture, and choosing a method.