Working from Home: What You Can Claim and What to Watch Out For (2025–26)
If you work from home, you may be eligible to claim a deduction for your home office expenses. The Australian Taxation Office (ATO) offers two methods for calculating your claim:
- fixed rate method
- actual cost method
Each has its pros and cons, and the best choice depends on your work setup and how well you keep records.
Let’s break it down.
Fixed Rate Method (70c per hour for 2024/25)
This method is simple and covers a range of running expenses:
- Electricity and gas
- Internet and phone usage
- Stationery and computer consumables
You can also claim separately for:
- Depreciation of office furniture and equipment (e.g. desks, chairs, monitors)
What You Need:
- A daily record of hours worked from home (estimates aren’t accepted)
- At least one bill or receipt for each type of included expense
What It Doesn’t Cover:
- Occupancy expenses (e.g. rent, mortgage interest)
- Cleaning costs
- Depreciation of home office space
Note: The ATO has not yet confirmed the fixed rate for the 2025–26 financial year. We expect it to remain at 70 cents per hour, consistent with the 2024–25 rate. This post uses the 2024–25 rate as a guide, and I’ll update this content if the ATO announces any changes.
💰 Actual Cost Method
This method lets you claim the actual work-related portion of your home office expenses, including:
- Electricity and gas
- Internet and phone
- Cleaning
- Depreciation of furniture and equipment
- Occupancy expenses (if you have a dedicated home office)
✅ What You Need:
- Receipts for all expenses
- A 4-week representative diary to show work-related use of phone/internet
- Calculations showing how you apportioned expenses (e.g. % of floor space)
❌ Watch Out:
- You must have a dedicated work area to claim occupancy costs
- Recordkeeping is more detailed and time-consuming
Recordkeeping Tips
No matter which method you choose, the ATO expects solid documentation:
- Daily log of hours worked from home
- Receipts for all expenses over $300
- Apportionment calculations for shared expenses
- Depreciation schedules for assets over $300
Common Mistakes to Avoid
The ATO has flagged these as red flags:
- Double dipping – claiming the same expense under both methods
- No records – failing to keep a daily log or receipts
- Copy-paste claims – repeating last year’s claim without checking if your work pattern changed
- Personal items – claiming non-work-related expenses
- Reimbursed costs – claiming expenses your employer already paid for
📌 Final Thoughts
Choosing the right method can make a big difference at tax time. If you’re working from home regularly, it’s worth reviewing your setup and keeping good records throughout the year.
Need help with your 2026 tax return or want to make sure your home office claim stacks up? Get in touch and I’ll walk you through it.
Disclaimer
This blog post is general in nature and doesn’t constitute financial or tax advice. Please speak with a registered tax agent or accountant for advice tailored to your situation.