If you worked from home during the 2024-25 financial year, you could be sitting on hundreds – or even thousands – of dollars in unclaimed tax deductions. The ATO gives Australian taxpayers two methods to claim their work from home tax deduction: the fixed rate method at 70 cents per hour, or the actual cost method where you calculate your real expenses.
Both employees and sole traders can claim. But picking the wrong method (or missing deductions you can stack on top) means leaving money on the table.
This guide breaks down exactly how each method works, which one puts more money back in your pocket, and what records you need to keep the ATO happy.
Tax rules change. Always check with a qualified tax professional for advice specific to your situation.
Two Methods to Claim Your Work from Home Deduction
The ATO offers two ways to calculate your home office expenses: the fixed rate method and the actual cost method. The old COVID-era shortcut method (80 cents per hour) is gone – it was discontinued after the 2022-23 income year.
Here is a quick comparison before we get into the details.
Fixed Rate vs Actual Cost: Side-by-Side
| Fixed Rate Method | Actual Cost Method | |
|---|---|---|
| Rate | 70 cents per hour (2024-25) | Calculate actual expenses |
| Covers | Electricity, phone, internet, stationery, computer consumables | All running expenses you can prove |
| Additional claims | Office furniture, equipment, repairs, depreciation of assets | Office furniture, equipment, repairs, depreciation of assets |
| Record keeping | Hours worked from home | Hours worked + receipts for every expense |
| Best for | Simple claims, moderate usage | High utility bills, dedicated home office |
| Dedicated work area required? | No | No (but helps your claim) |
The Fixed Rate Method: 70 Cents per Hour
The fixed rate method is the simpler option. For the 2024-25 income year, you claim 70 cents for every hour you work from home. This is up from 67 cents in the previous year.
What the 70 Cents Covers
That 70 cents per hour covers five categories of running costs:
- Electricity for lighting, heating, cooling, and running your equipment
- Phone usage (mobile and landline)
- Internet expenses
- Stationery and computer consumables (ink, paper, toner)
- Depreciation of items included in the fixed rate (phones, internet hardware)
What You Can Still Claim on Top
Here is the part many people miss. The fixed rate only covers running costs. You can still claim these expenses separately, on top of the 70 cents per hour:
- Office furniture – desk, chair, bookshelves
- Technology and equipment – monitors, keyboards, webcams, headsets
- Repairs and maintenance to a dedicated home office
- Depreciation of assets over $300 (for example, a $1,200 laptop depreciated over its effective life)
So if you bought a $600 ergonomic chair and a $400 monitor during the year, you can claim those on top of your fixed rate claim.
Worked Example: Fixed Rate Method
Meet Sarah from Melbourne. Sarah is a marketing coordinator who works from home three days a week. She tracks her hours and works about 1,200 hours from home during the 2024-25 financial year.
Fixed rate claim:
1,200 hours x $0.70 = $840
Additional claims on top:
- Ergonomic desk chair: $550 (immediate deduction – under $300 work portion after private use adjustment… let’s say 100% work use, over $300, so depreciated over 10 years = $55/year)
Actually, let’s keep Sarah’s example clean:
- Standing desk (100% work use, cost $500, effective life 10 years): $50 depreciation
- Monitor (100% work use, cost $400, effective life 4 years): $100 depreciation
Sarah’s total work from home deduction: $840 + $50 + $100 = $990
That is almost $1,000 back at tax time – and all she needed to track were her hours plus keep receipts for the furniture and monitor.
> Tracking hours is easy. A simple diary, spreadsheet, or timesheet works. SparkReceipt’s expense tracker can also log and categorize your home office purchases, so everything is in one place when you file.
The Actual Cost Method: Calculate Your Real Expenses
The actual cost method takes more effort, but it can pay off if your home running costs are high. Instead of a flat rate, you calculate the actual proportion of each expense that relates to working from home.
What You Can Claim
With the actual cost method, you can claim the work-related portion of:
- Electricity
- Gas (heating)
- Phone (mobile and landline)
- Internet
- Stationery and computer consumables
- Cleaning costs for your dedicated work area
- Depreciation of furniture and equipment (same as fixed rate – you can claim this under either method)
- Repairs to your home office
How to Calculate Your Claim
You need to work out the percentage of each expense that relates to your work use. There are a few ways to do this:
For electricity and gas: Calculate based on floor area of your home office as a proportion of total floor area, adjusted for the hours you use it.
For phone and internet: Look at your bills and work out the percentage used for work versus personal use.
For cleaning: If you have a dedicated office room, calculate the floor area as a proportion of total house area.
Worked Example: Actual Cost Method
Meet Raj from Brisbane. Raj is a freelance software developer who works from a dedicated home office five days a week. His office takes up about 15% of his home’s total floor area.
Here are Raj’s annual household expenses and his work-related portions:
| Expense | Annual Total | Work % | Deductible Amount |
|---|---|---|---|
| Electricity | $2,400 | 15% | $360 |
| Gas (heating) | $800 | 15% | $120 |
| Internet | $1,200 | 60% | $720 |
| Mobile phone | $960 | 50% | $480 |
| Cleaning (office area) | $2,600 | 15% | $390 |
| Stationery | $200 | 100% | $200 |
Raj’s running cost claim: $2,270
Additional claims (same as fixed rate):
- New office desk: $800 (depreciated over 10 years = $80)
- Laptop: $2,400 (depreciated over 4 years = $600)
Raj’s total work from home tax deduction: $2,270 + $80 + $600 = $2,950
Compare that to what Raj would get under the fixed rate method. If Raj works about 1,800 hours from home per year:
1,800 x $0.70 = $1,260 (plus the same $680 in depreciation = $1,940)
The actual cost method saves Raj an extra $1,010. For someone with a dedicated office and high running costs, the extra record keeping is worth it.
Which Method Should You Choose?
The right method depends on your situation. Here is a quick guide:
Choose the fixed rate method if you:
- Work from home part-time (one to three days a week)
- Don’t have extremely high utility bills
- Want to keep record keeping simple
- Share a home where isolating your costs is tricky
Choose the actual cost method if you:
- Work from home full-time or close to it
- Have a dedicated office room (makes percentage calculations easier)
- Have high electricity, internet, or phone costs
- Are a sole trader with significant running expenses
The crossover point: As a rough guide, if you work from home more than 25 hours per week and have a dedicated office that is 10% or more of your home’s floor area, the actual cost method often comes out ahead. Run the numbers both ways before you commit.
> Keep receipts for both methods. Even with the fixed rate, you still need proof of additional claims like furniture and equipment. SparkReceipt’s AI receipt scanner reads receipts in seconds and categorizes them automatically – so you are always ready if the ATO asks questions.
Record Keeping: What the ATO Expects
The ATO has tightened its record keeping requirements. Here is exactly what you need for each method.
Fixed Rate Method Records
- A record of hours worked from home for the entire income year. This can be a timesheet, roster, diary, or time-tracking app. The ATO does not accept estimates.
- Receipts or records for any additional items you claim on top (furniture, equipment, repairs)
Actual Cost Method Records
- A record of hours worked from home (same as above)
- Receipts or bills for every expense you claim (electricity, gas, phone, internet, cleaning, stationery)
- A reasonable basis for your calculations showing how you worked out each work-related percentage
- Depreciation schedules for assets over $300
How Long to Keep Records
Keep all records for five years from the date you lodge your tax return. If you are in a dispute with the ATO, keep them until the dispute is resolved.
A practical tip from a tax agent: One of the most common audit triggers for work from home claims is missing hour logs. If you can’t prove you worked those hours from home, the ATO can deny your entire claim.
Special Rules for Sole Traders
If you run your business from home as a sole trader, you can claim the same work from home deductions as employees – but you might also be able to claim occupancy expenses if you have a dedicated area used exclusively for business.
Occupancy expenses include:
- Rent or mortgage interest
- Council rates
- Home insurance premiums
- Land tax
The catch: Claiming occupancy expenses can affect your capital gains tax (CGT) main residence exemption when you sell. Talk to your accountant before going down this path.
For most sole traders, sticking to running expenses (either method) plus furniture and equipment deductions is the safer route.
Common Mistakes to Avoid
After talking with Australian tax agents, these are the errors they see most often with work from home tax deductions in Australia:
- Not keeping an hours log. Estimating is not good enough. The ATO requires actual records of hours worked from home.
- Double-counting expenses. If you use the fixed rate, you cannot also claim electricity, phone, or internet separately – those are already included in the 70 cents.
- Claiming personal items. That fancy coffee machine in your home office? Not deductible unless it is exclusively for business use (and even then, it is a stretch).
- Using the old shortcut method. The 80 cents per hour shortcut method ended after 2022-23. If your tax software still shows it, ignore it.
- Forgetting to depreciate big items. Items over $300 need to be depreciated over their effective life – you cannot claim the full amount in one year (unless you are a small business using the instant asset write-off).
- Ignoring additional claims on top of the fixed rate. Many people claim the 70 cents and stop there, missing out on furniture and equipment deductions.
How SparkReceipt Helps Australian Remote Workers
Keeping five years of receipts organized sounds like a headache. It doesn’t have to be.
SparkReceipt’s AI receipt scanner captures every detail from your home office purchase receipts – vendor, amount, date, and GST – in seconds. Forward email receipts from office supply stores, internet providers, and furniture shops, and they are scanned and categorized automatically.
When tax time rolls around, export a clean report of all your home office expenses. Your accountant gets organized data instead of a pile of crumpled receipts.
Start tracking your home office expenses for free – no credit card required.
FAQ: Work from Home Tax Deduction Australia
Can I claim work from home deductions if I only work from home one day a week?
Yes. There is no minimum number of days. If you work from home for any amount of time, you can claim for those hours. Just make sure you keep a record of the actual hours worked from home.
Do I need a separate room to claim work from home deductions?
No. You do not need a dedicated room for either the fixed rate or actual cost method. However, having a dedicated work area makes it easier to calculate percentages for the actual cost method and strengthens your claim if the ATO asks questions.
Can I claim my home internet in full?
No. You can only claim the work-related portion of your internet bill. If you use the fixed rate method, internet is already included in the 70 cents per hour. If you use the actual cost method, you need to calculate a reasonable work-use percentage.
What if I forgot to track my hours?
Without an hours log, the ATO can reject your work from home claim entirely. If you have not been tracking hours, start now. Going forward, use your work calendar, timesheet system, or a simple daily log. For the current year, any records you do have – such as a work roster or calendar entries – may help support your claim.
Can I claim both the fixed rate and actual cost in the same year?
No. You must choose one method for the entire income year. You cannot switch between them or split different expenses across both methods. However, additional claims like furniture and equipment depreciation apply the same way under both methods.
Does working from home affect my capital gains tax when I sell?
If you only claim running expenses (either method), your main residence CGT exemption is generally not affected. If you claim occupancy expenses (rent, mortgage interest, rates), you may lose part of your CGT exemption for the period you claimed those expenses. This is a question best answered by your accountant.
Key Takeaways
- The fixed rate method gives you 70 cents per hour for the 2024-25 income year, covering electricity, phone, internet, stationery, and computer consumables
- The actual cost method lets you calculate real expenses – often better for full-time remote workers with a dedicated office
- Both methods let you claim furniture, equipment, and depreciation on top
- You must keep a log of hours worked from home – the ATO does not accept estimates
- Both employees and sole traders can claim work from home deductions
- Keep all records for five years from when you lodge your return
Don’t let poor record keeping cost you hundreds of dollars in missed deductions. Try SparkReceipt free and keep every home office receipt organized, categorized, and ready for tax time.
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Related reading:
- ATO: Home office expenses – Official ATO guidance
- ATO: Fixed rate method – Detailed fixed rate rules
- Home Office Deduction 2026 (US) – How the US equivalent works
- ATO Cents per KM 2026 – Vehicle deductions for Australian taxpayers
- Expense Tracking for Freelancers – Complete guide to tracking business expenses
- How to Save Receipts for Taxes – Receipt organization best practices
- Receipt Tracker for Taxes – Keep your tax receipts organized
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