Guide · Updated 17 August 2026
Work from home deductions: fixed rate or actual cost?
The two methods, what each one actually covers, the records the ATO now insists on, and how to work out which gives you more.
How much can you claim for working from home?
Two methods. The fixed rate is 70 cents per hour worked from home and covers electricity, gas, internet, phone, stationery and computer consumables — but you must keep a record of the actual hours for the whole year; an estimate or a four-week sample is no longer accepted. The actual cost method claims the work-related portion of each expense with receipts and a defensible apportionment, and usually wins if you have a dedicated work area. Under both methods, assets like desks, chairs and computers are claimed separately through depreciation.
- Fixed rate: 70c per hour worked from home
- Actual cost: apportioned expenses with receipts
- Hours must be recorded for the full year
- Furniture and equipment are claimed separately
The fixed rate method (70 cents per hour)
Multiply the hours you worked from home during the year by 70 cents. That single figure covers energy, internet, mobile and home phone, stationery and computer consumables — you cannot then claim any of those items separately, even for the portion you'd argue is extra.
The record-keeping requirement is where most claims fail. You need a record of the total hours actually worked from home across the whole income year: a timesheet, roster, diary, or a spreadsheet you keep as you go. A representative four-week diary extrapolated across the year was acceptable under earlier rules and no longer is.
Worked example. Three days a week from home, 7.6 hours a day, 46 working weeks after leave: 3 × 7.6 × 46 = 1,048.8 hours. At 70c that's a $734 deduction, plus depreciation on your desk, chair and laptop.
The actual cost method
Here you work out the work-related portion of each running expense and claim that. Electricity and gas by the floor area of your work space and the hours used; internet and phone by a documented work-use percentage; cleaning of the dedicated area; and depreciation of furniture and equipment.
It takes more effort and more paperwork, but for someone with a genuine home office it frequently produces two to three times the fixed-rate figure — particularly with a large power bill, ducted air conditioning, or a dedicated room used only for work.
Worked example. A dedicated 12m² office in a 150m² home is 8% of the floor area. Annual electricity of $2,400 apportioned at 8%, adjusted for the proportion of time the area is used for work, plus 60% of a $90/month internet bill and 40% of a $70/month mobile — that combination often lands between $1,200 and $1,800 before depreciation.
Which method should you use?
Run both. The fixed rate suits people who work from home occasionally, share a living space, or don't want to keep receipts. Actual cost suits a dedicated room, high energy use, or a home that is genuinely a base of operations. We calculate both for clients and lodge the higher, properly substantiated figure — the difference is regularly several hundred dollars.
What you cannot claim
- Occupancy costs — rent, mortgage interest, rates and home insurance — unless part of your home is a genuine place of business. Employees almost never qualify, and claiming them can cost you part of your main residence CGT exemption.
- General household items — coffee, tea, milk, toilet paper.
- Costs your employer reimbursed, or items your employer provided.
- Children's education costs or items used for schooling from home.
- Under the fixed rate: phone, internet, energy and stationery again — they're already in the 70c.
Equipment and depreciation
Assets are separate from running costs under both methods. Items costing $300 or less that you use for work can generally be claimed immediately (employees), while more expensive items are depreciated over their effective life, apportioned for private use. Keep the invoice, note the purchase date, and record an honest work-use percentage — for a laptop used for both work and Netflix, 70/30 is credible and 100% is not.
If you run a business from home
The analysis changes: a home-based business may claim a portion of occupancy costs where an area is genuinely a place of business, but doing so generally exposes that portion to CGT when you sell. We work through the trade-off on our home business accounting page, and it's worth modelling before you claim rather than after.
Frequently asked questions
What records do I need for the 70c fixed rate?
A record of the total hours you actually worked from home for the entire income year — a diary, roster, timesheet or spreadsheet kept contemporaneously. You also need at least one bill for each expense category the rate covers, to show you incurred those costs. Estimates and extrapolated samples are not accepted.
Can I claim my home office if I only work from home one day a week?
Yes. Claims are proportional to hours actually worked from home, so one day a week is roughly 300–380 hours, or about $210–$266 at the fixed rate, plus depreciation on equipment you use.
Is the fixed rate still 67 cents?
No — the fixed rate rose from 67 cents to 70 cents per hour from 1 July 2024 and applies for the years since. Guides quoting 67c or the older 80c shortcut rate are out of date.
Can two people in the same household both claim?
Yes, if you both genuinely work from home and both keep hours records. Under the fixed rate you each claim your own hours. Under actual cost you must apportion shared expenses so the same dollar isn't claimed twice.
Do I need a separate room?
Not for the fixed rate or for running expenses generally. A dedicated room matters for the actual cost method (it makes apportionment defensible) and is effectively required before occupancy costs are even arguable.
On this page
Talk it through
General guidance only — your circumstances change the answer. A free 15-minute call is usually enough to tell you where you stand.
Book a free consultationKeep reading
More guides.
Rental property deductions, line by line
What's deductible while a property is genuinely available for rent, what's capital, and where the ATO finds most errors in investor returns.
Learn more →Vehicle claims: log book or cents per kilometre?
Which trips count, the two methods and what each is worth, and why twelve weeks of records can be worth thousands.
Learn more →The compliance calendar, in one place
Every date that carries a penalty, what shifts when you lodge through a registered agent, and what to do when you can't pay on time.
Learn more →Ready when you are
Want this applied to your situation?
Free 15-minute consultation with a CPA-qualified, TPB-registered accountant. Mon–Fri 9am–5pm AEST.