Working from Home – 2025 Update
With flexible and remote work becoming common, many clients have home office expenses. The rules for claiming these were updated by the ATO recently, so even if you’ve claimed home office costs in the past, please read this section carefully for the current methods and requirements.
Two methods to claim Working-from-Home (WFH) expenses:
ATO Fixed Rate Method (Revised) – Simplified per-hour deduction, and
Actual Cost Method – Calculate and claim actual work-related portion of expenses.
ATO Fixed Rate Method (Revised 67¢/70¢ Rate)
The ATO’s fixed rate method has been revised and increased to cover more expenses in one rate. For the 2024-25 income year, the rate is 70 cents per hour . (It was 67c for 2022-23 and 2023-24, and before that there was a short-term 80c COVID rate which ended 30 June 2022, and a longstanding 52c rate which has been replaced by this revised method).
This single rate per work hour covers the combined cost of the following expenses you incur while working from home:
Electricity and gas for heating, cooling, lighting and powering your work area (energy costs).
Internet expenses (Wi-Fi or data costs for home internet).
Mobile and home phone usage (work-related call and usage portion).
Stationery and computer consumables (pens, paper, printer ink, etc).
In other words, if you use this method, you cannot separately claim any of the above categories – the 70¢ rate already includes them . This is convenient as you don’t need to calculate each one individually. However, to use the fixed rate method, you must meet some conditions :
You must be incurring expenses in those categories as a result of working from home. (Virtually everyone working from home will incur at least some extra electricity or internet use, so this is usually fine.)
You must keep a record of your actual hours worked from home. This is critical – from 1 July 2022 onward, the ATO no longer accepts “estimating based on a 4-week diary” for the whole year (which was allowed under the old 52c method). Now you need contemporaneous records of all the hours you work from home . Acceptable records include timesheets, roster, work diary, or even a spreadsheet where you log hours each day you WFH (so long as it’s kept as you go, not just a guess later). If you have a pattern (e.g., regular WFH days), you can keep a representative log for a period and apply it, but the ATO guidance indicates they prefer actual total hours.
You need at least one document for each of the expense categories (energy, phone, internet, stationery) to show you incurred those costs. For example, a power bill, a phone bill, an internet bill, etc., sometime during the year, in your name (or shared name if you share bills). Even if you live with family and don’t pay the bills yourself, technically to claim you should be contributing – if that’s your situation, ask us how to substantiate. But generally, keep a couple of utility bills on file.
💡 How to calculate with 70¢ rate
Sum up all hours you worked from home during the year and multiply by $0.70. If you worked from home 2 days a week for the whole year, that could be around (say 8 hours × 2 days × 48 weeks = 768 hours) → 768 × $0.70 = $537.60 deduction. If you were full-time at home (approx 1,800 hours), it’d be $1,260. We will pro-rate if you only started WFH mid-year or stopped at some point.
Separate Equipment and Furniture Claims
The fixed rate does not include depreciation for office furniture or tech equipment, nor does it include the cost of buying new equipment . So in addition to the $0.70/hour, you can separately claim:
Decline in value (depreciation) of assets used for work at home, like computers, laptops, monitors, printers, office furniture (desk, chair, shelves), etc. . If an item costs $300 or less, you can generally claim the full cost in one go (immediate deduction) . If over $300, we depreciate it over its life (e.g., a $1,500 computer over 3 years = $500/year, and claim proportion for work use). Note: If an item is used partly for work, partly private, we only claim the work portion. For example, you bought a $1,000 desk that you use 50% for your job and 50% for personal use – you’d depreciate the $1,000 (say over 10 years = $100/year) and then claim 50% = $50 each year. We’ll help with these calculations, just bring purchase details.
Repairs or maintenance of your home office assets. For example, you paid someone to repair your office chair or service your laptop – deductible. If you have a dedicated home office (a separate room), you may also claim cleaning costs for that office proportionally, and even occupancy expenses (like a % of rent, or mortgage interest, property insurance, rates) but only in very specific circumstances. For employees, occupancy (rent/mortgage) is typically NOT claimable even if you have a home office, because you’re not required by your employer to maintain a home office – it’s usually your choice. So by claiming mortgage interest can jeopardise the full CGT exemption on your home. Usually, only self-employed or those who run significant business from home would claim occupancy. We generally advise employees NOT to claim a portion of rent or mortgage – the ATO scrutinizes this heavily. If you are renting and your employer does not provide you a desk (so you had to WFH), arguably a portion of rent could be deductible, but again, the ATO’s fixed rate is supposed to cover most situations, and they’ve stated it may account for some incidental occupancy use. For simplicity and safety, most people stick to the 70c rate + equipment and do not claim part of rent. We can discuss if you think you have a case for occupancy expenses. (For example, running a home-based business is a different story – then yes, portion of rent may be deductible as a business expense).
Record-Keeping for Fixed Rate
To reiterate – you need a record of hours. This could be your work timesheets (if they show WFH days/hours) or a manual diary. Starting 2023, the ATO has been strict: estimates or retroactive guesses aren’t sufficient. If you haven’t been tracking, consider reconstructing from calendar meetings or emails – but try to maintain a log going forward. Also keep a sample of bills (at least one per quarter for phone & internet, and each utility). We don’t need to send those with the return, but store them in case.
Fixed Rate in Practice
Keisha is an employee engineer who works from home 2 days a week throughout 2024-25. She keeps a spreadsheet noting each date she works from home and the hours (typically 8 hours/day, with a few overtime hours here and there). At year end, she has a total of 800 hours WFH. Using the fixed rate, her deduction is 800 × $0.70 = $560. This $560 already covers her increased utility bills, work-related phone, and internet usage, so she can’t claim those separately. During the year, Keisha also bought a new office chair for $450 and a second computer monitor for $300 to enhance her home workstation. The chair is over $300, so she depreciates it – say over 10 years = $45/year (assuming 100% work use in her home office). The monitor is $300, which she can claim in full immediately (since it’s exactly at the $300 threshold). She also had an existing laptop (cost $2,000) used 50% for work at home – depreciation say $400 for the year, claim 50% = $200. We will include those on top of the $560. Keisha’s total home office claim = $560 (hours) + $45 (chair) + $300 (monitor) + $200 (laptop depreciation) = $1,105.*
If Keisha also occasionally used her mobile phone for work calls on days she was in the field (not at home), note that the 70c rate already covers all her phone use for work (both home and out-and-about) . She can’t claim a separate mobile deduction unless she forgoes the 70c method and uses actual costs for everything. The fixed rate is an all-or-nothing for those included expenses. In her case, the fixed rate is simpler and probably more beneficial given moderate usage.
Actual Cost Method
This method requires more effort, as you will calculate the actual work-related portion of each expense category individually. You might use this method if you have very high expenses and a dedicated work area, and you think the actual claim would exceed what the fixed rate gives you. Or if you had work-from-home expenses not typical (e.g., high usage of equipment, or you want to claim specific portions of phone because you also use phone heavily outside of WFH).
Under actual cost, you can claim:
Energy (electricity/gas): You’d need to work out the cost attributable to your work hours. This typically means figuring out the power consumption of your work area. For example, you could use the formula: (Power rating (kW) of equipment × hours used × cost per kWh). You’d add, say, the wattage of your computer, monitors, and also a portion of home heating/cooling and lighting. If you have a dedicated room, you could use floor area: e.g., office is 10% of house, and during work hours you heat/cool only that room (or whole house?), etc. It can get complicated – one needs bills and often a diary of appliance use.
Internet: Calculate work percentage of your internet. Perhaps you determine that 40% of your internet data usage or time is for work (maybe by router stats or a reasonable estimate). You’d apply that to your annual internet cost (say $1,000/year × 40% = $400 deduction). You need documentation (bills, and a basis for %).
Phone: Similar, determine how many call minutes or data % on your phone was work. Or count work calls versus total calls in a sample period (e.g., 30 out of 100 calls in a month were work = 30%). Apply to phone bill.
Stationery & Consumables: Sum up actual costs of paper, ink, pens used for work.
Office Furniture & Equipment depreciation: Same as allowed above, but you’d include it here too (this part is no different whether you use actual or fixed – you always calculate these separately).
Cleaning: If you have a dedicated office that you clean or pay a cleaner for, and it’s exclusively for work, you can claim that portion of house cleaning. E.g., house cleaner $100 fortnight, office is 10% of home, and used only for office, so $10 is for office × 26 = $260/year.
Occupancy (Rent/Mortgage): If you legitimately qualify (like you run a business from home or your employer requires you to work from home and you have no office provided – rare), you could claim a portion of rent or interest. Usually, employees do not claim this due to aforementioned reasons (risk of CGT impact, etc.). We typically exclude this for simplicity unless clearly justified.
The Actual method requires robust evidence.
Copies of bills, records of work use %, justification for apportionment. The ATO can ask for these calculations. It can be worth it if, say, you have a high mortgage and want to claim some interest for a home office and you’re okay with the CGT consequences – or if your working hours at home are low but your costs are extremely high (maybe you have expensive equipment running, etc.). For most, the fixed rate yields a pretty fair result and is much easier.
Actual Cost in Action
David works from home full-time in a dedicated home office (a spare room). He decides to use actual cost method. His yearly electricity bills total $1,200. Through measurements, he figures when he’s working, he consumes about $0.20 of electricity per hour for computer and A/C. Over ~1,800 work hours, that’s $360 of electricity attributable to work. His internet usage is heavily work-related (he’s an IT dev downloading big files); he estimates 70% of his $800 annual internet = $560 work use. His phone is a work mobile paid by employer (so no claim needed there).
He spent $200 on office supplies and printing. He also claims $1,000 depreciation on various equipment. Adding up: $360 + $560 + $200 + $1,000 = $2,120. If he used the fixed rate, 1,800 hrs × $0.70 = $1,260, plus $1,000 equipment = $2,260. Actually, in this scenario, the fixed rate would give $2,260 (higher) vs $2,120. If his actual internet and electricity were even higher, actual might win. The point is, you’d choose whichever is more advantageous (and that you have records for). We can calculate both if you provide detailed info.
Note: You cannot cherry-pick between methods for different parts. You either use the fixed rate for all those included expenses or actual for all. (You do always separately claim equipment depreciation either way, that’s fine.) Also, the shortcut 80¢ method from COVID (covering all expenses with no separate depreciation claim) is no longer available for 2024-25, so ignore older articles referencing that.
In Summary for Home Office
For most clients, the fixed rate method is simpler and we’ll use that if your documentation supports it. Just ensure you keep a log of hours worked from home and a few bills. We will add on any big ticket purchases (laptop, chair, etc.) to maximize your claim. If you think you’d get a lot more by claiming actual costs (maybe you have very high work-related usage and costs), we can attempt that – but be prepared with all the bills and a logical method to apportion work vs private. We want to make a credible claim that can withstand ATO scrutiny, especially since home office claims are a known focus area (the ATO is looking at people double-dipping or not having proper logs).
One more thing: if you operate a business from home (home is your principal place of business), the approach may differ (you might claim occupancy expenses and such, but then part of your home is subject to CGT on sale). We handle that under the business section on a case-by-case basis. This section is mainly about employees WFH.
If you have any questions about your home office scenario, let us know. We’ll apply the method that gives you the best legitimate deduction.