Working From Home Tax Deductions Australia: What You Can Claim in 2026

The two methods for claiming WFH expenses

Since 1 July 2022, there are two methods: the fixed rate method and the actual cost method. The old "shortcut" 80 cents per hour method ended on 30 June 2022 and is no longer available.

Method 1: Fixed rate (70 cents per hour)

This is the simpler option. You claim 70 cents for every hour you work from home during the income year. That's it.

Around five million Australians now work from home at least part of the time. And yet a huge chunk of them leave money on the table every tax year because they either don't know what they can claim, or they're scared of doing it wrong.

The good news: the ATO has actually simplified things. The bad news: the simplified version still has a few traps. Here's a plain-English walkthrough of what you can claim, which method to use, and what records you need to keep.

The 70 cents per hour covers:

• Electricity and gas for your home office area
• Home internet costs (work-related portion)
• Phone costs (work-related portion)
• Stationery and computer consumables

What it does not cover (you can claim these separately on top):

• Decline in value of home office equipment (desk, chair, monitor, etc.)
• Decline in value of devices used for work (laptop, iPad, headset)
• Repairs and maintenance of home office assets

Example: You work from home 3 days a week, 48 weeks of the year. That's roughly 1,152 hours (3 x 8 x 48). Your deduction: 1,152 x $0.70 = $806.40. If you also claim depreciation on a $1,500 desk (10-year effective life, 10% prime cost), you add another $150/year. Total deduction: ~$956.

At a 32.5% tax rate, that's about $311 back in your pocket. Not nothing.

Method 2: Actual cost method

This one is more work but can produce a bigger deduction if you have high home office running costs or use a dedicated room exclusively for work.

You calculate the actual additional costs of running your home office, based on either floor area proportion or actual usage. This includes:

• Electricity and gas: work area as a proportion of total floor area
• Internet: actual work-related usage percentage
• Phone: actual work-related call and data costs
• Depreciation of all home office equipment and devices

The catch: you need much better records. You'll need receipts, bills, and a logbook showing how much of each expense was work-related. Most people aren't going to bother, and the fixed rate method is usually enough.

Which method should you use?

For most people, the fixed rate method is the winner. It's simpler, the record-keeping is easier, and you still get to claim equipment depreciation on top.

The actual cost method is worth considering if:

• You have a dedicated home office that takes up significant floor space
• Your electricity and internet bills are unusually high
• You work from home full-time, not just a few days a week

If in doubt, run the numbers both ways. The ATO has a calculator on their website, or an accountant can do this quickly.

What you can't claim

This is where people get into trouble. You cannot claim:

• Occupancy expenses (rent, mortgage interest, council rates) unless your home is genuinely your principal place of business. For most employees who simply work from home occasionally, this doesn't apply -- and claiming it can affect your CGT main residence exemption if you ever sell the property.
• Coffee and snacks. Yes, people try this. No, it doesn't work.
• General household expenses like your Netflix subscription or home cleaning.
• Equipment used primarily for personal purposes. If your "home office laptop" is mostly used for gaming, you can only claim the work-related portion.

Equipment and furniture: depreciation rules

This is where a lot of deductions get left behind. If you bought a desk, chair, monitor, keyboard, or webcam for work, you can claim depreciation on these -- regardless of which method you use for running costs.

The rules:

• Items $300 or less (used more than 50% for work): claim the full cost immediately in the year of purchase
• Items above $300: depreciate over the asset's effective life. The ATO sets effective life guidelines -- for example, a desk has an effective life of 10 years, a laptop 2 years, monitors 4 years.
• If an item is used partly for work and partly personally, you can only claim the work-related proportion.

Example: You bought a $400 monitor that you use 80% for work. You can claim depreciation on $320 (80% of $400) over 4 years using the prime cost method (25% per year). That's about $80/year.

Phone and internet: the actual usage question

Under the fixed rate method, your phone and internet are already included in the 70 cents per hour. You don't need to separately calculate them.

Under the actual cost method, you need to work out the work-related percentage. The ATO's approach: keep a four-week diary of actual usage (calls made, data used for work vs personal), then apply that percentage to your annual bill.

Typical work-related percentages the ATO considers reasonable:

• Internet: 20-50% work-related for most WFH employees
• Mobile phone: 10-50% work-related depending on role

Record-keeping: what you actually need

This is the part people underestimate. Effective 1 March 2023, the ATO tightened the record-keeping requirements for the fixed rate method, and the rules are now stricter.

For the fixed rate method, you must keep:

• A record of the total number of hours you worked from home during the year -- this must be an actual record (diary, spreadsheet, timesheet, employer records), not an estimate. The ATO no longer accepts "I worked from home X days a week" as sufficient.
• At least one piece of evidence for each type of expense the rate covers -- e.g. an electricity bill showing you actually have electricity costs, a phone bill showing you have phone costs.
• Receipts for any separately claimed items (equipment, furniture).

The easiest approach: create a spreadsheet or use a phone app to log your WFH hours throughout the year. Don't wait until June -- your memory won't be reliable enough.

How much could you actually get back?

The rough table is already near the top because that is what most people want first. The key point is simple: add in equipment depreciation and you can push the total deduction well above $2,000 for full-time WFH employees. That's a meaningful refund.

Want to see how your overall tax position looks? Our Income Tax Calculator shows your take-home pay after deductions, and the Pay Calculator shows what a pay rise (or tax refund) actually means week to week.

Common mistakes to avoid

1. Mixing up the shortcut method with the current fixed rate

The "shortcut" 80 cents per hour method ended on 30 June 2022. You cannot use it for 2022-23 onwards. The current fixed rate is 70 cents. Don't let outdated advice trip you up.

2. Claiming occupancy expenses as a regular employee

Unless your employer has a formal arrangement that requires you to work from home as your principal place of business, you cannot claim rent or mortgage interest. Claiming this incorrectly can also jeopardise your CGT main residence exemption. Not worth the risk.

3. Estimating hours instead of tracking them

Since 1 March 2023, the ATO requires actual records for the fixed rate method -- not estimates. A quick daily log (even just ticks on a calendar) is enough. But "I usually worked from home 3 days a week" isn't sufficient if you get audited.

4. Forgetting to claim equipment bought mid-year

If you bought a new monitor, chair, or keyboard during the year, you can start depreciating it from the date of purchase. Pro-rate it for the portion of the year you owned it.

5. Claiming 100% of shared-use items

If you use your home laptop for both work and personal use, you can only claim the work-related proportion. A 70/30 work-personal split means you claim 70%. Keep a log for a representative four-week period if you need to justify the split.

Can you claim a home office if you hot-desk?

This one catches a lot of people out. The ATO says you can claim WFH expenses as long as you are genuinely working from home -- even if you don't have a dedicated room. Working at the kitchen table counts. Working in a shared living area counts.

What doesn't count: occasionally checking work emails from the couch on the weekend, or doing a bit of prep work at home outside normal hours. The ATO expects the hours to be genuine working hours, not peripheral activity.

Should you use an accountant?

For most PAYG employees with a standard WFH situation, you can handle this yourself through myTax. The fixed rate method is genuinely straightforward once you've got your hours logged.

An accountant is worth considering if:

• You're self-employed and work from a home office (the actual cost method and potential occupancy claims are more complex)
• You've bought significant home office equipment over the year
• Your situation involves mixed personal/business use of multiple assets

Either way, keep your records tidy throughout the year. Scrambling in June to reconstruct your hours is painful. Fifteen seconds a day on your phone calendar is all it takes.

Quick checklist for tax time

• Total hours worked from home (from your records)
• Receipts for any equipment purchased during the year
• A recent electricity or internet bill (as evidence of expenses)
• Note the purchase date and price of any assets you're depreciating
• Your work-use percentage for shared-use devices

Multiply your hours by 0.70, add any equipment depreciation, and you've got your WFH deduction. Lodge it in myTax, or hand it to your accountant. Job done.

Keep your tax refund working harder for you
Up Bank lets you set up automatic savings buckets with zero willpower required. Get $10 free when you sign up.

Try Up Bank →