Claiming Home Office Expenses for FY25
This guide applies to the 2025-26 income year, being 1 July 2025 to 30 June 2026.
If you worked from home to perform your employment duties or carry on your business, you may be able to claim the additional running expenses you incurred.
There are two methods:
Fixed-rate method - 70 cents per hour for FY2026
Actual-cost method - calculate the actual work-related portion of each expense
You can use the method that produces the better lawful result, provided you have the records required for that method.
❗️ Before You Claim
To claim working-from-home expenses, you must:
work from home while performing substantive employment or business duties;
incur additional running expenses because you worked from home;
pay the expenses yourself;
not be reimbursed by your employer or another person; and
keep records supporting the hours, expenses and calculations claimed.
Occasionally checking emails, reading a roster or answering a brief phone call at home will generally not be enough by itself.
You do not need a dedicated home office to use the fixed-rate method. You may work from a dining table, spare room or another suitable area, provided you are genuinely performing your work duties and incur additional expenes.
Compare the Two Methods
Issue | Fixed-rate method | Actual-cost method |
|---|---|---|
FY2026 rate | 70 cents per hour | No fixed rate |
Hours record | Actual hours for the entire income year | Records supporting when and how the home area was used |
Electricity and gas | Included | Actual additional work portion |
Internet usage | Included | Actual work-related portion |
Phone usage | Included | Actual work-related portion |
Stationery and consumables | Included | Actual work-related portion |
Equipment depreciation | Claimed separately | Claimed separately |
Equipment repairs | Claimed separately | Claimed separately |
Cleaning a separate office | May be claimed separately | Actual work-related amount |
Dedicated office required | No | Not always, although some expenses require a dedicated area |
Record-keeping burden | Moderate | High |
Suitable for | Most hybrid and remote employees | Clients with detailed records and unusually high actual costs |
Method 1 — FY2026 Fixed Rate of 70 Cents per Hour
For the 2025–26 income year, the fixed rate is:
70 cents for each actual hour worked from home
The rate covers the work-related portion of:
electricity and gas used for lighting, heating, cooling and operating electronic equipment;
home and mobile internet expenses;
home and mobile phone usage;
stationery; and
computer consumables such as printer ink and paper.
The fixed rate is intended to cover these expenses for the entire income year.
No double claiming
If you use the fixed-rate method, you cannot separately claim:
electricity;
gas;
internet usage;
mobile or home phone usage;
stationery; or
computer consumables.
This restriction also applies to work-related phone and internet use away from home.
For example, if you use your personal mobile phone when working from home and also make work calls while at your employer’s office or travelling for work, the fixed rate covers your total work-related phone usage deduction for the year. You cannot add another mobile phone usage claim.
The purchase price or depreciation of the mobile phone handset itself is different and may be claimed separately, subject to work-use apportionment and the depreciation rules.
What Can Be Claimed Separately?
The following expenses are not included in the 70-cent rate and may be claimed separately where eligible:
decline in value of a laptop, computer, monitor, printer, mobile phone handset, desk or office chair;
immediate deduction for eligible assets costing A$300 or less;
repairs and maintenance of work-related equipment;
cleaning costs for a separate home office;
certain other expenses not included in the fixed rate.
You must keep invoices, receipts and work-use calculations for these separate deductions.
Actual Hours Must Be Recorded
For the fixed-rate method, the ATO requires a record of the actual hours you worked from home during the entire income year.
Acceptable records may include:
employer timesheets;
rosters;
payroll or attendance records;
a daily diary;
electronic calendars;
work schedules;
a spreadsheet recording each day’s hours;
other contemporaneous records showing actual hours worked.
Your record should identify:
date;
start time;
finish time;
unpaid breaks;
total actual work hours;
brief description of the duties performed.
Do not include:
lunch or other unpaid breaks;
annual leave;
sick leave;
public holidays not worked;
time commuting;
private internet or computer use;
time merely available for work but not actually working.
Important
You cannot record four representative weeks and automatically apply that pattern to the full year under the fixed-rate method.
You also cannot simply estimate that you worked from home two days each week for 48 weeks without records showing the actual days and hours.
Download Our FY2026 Working from Home Diary
Use our spreadsheet to record and consolidate your working-from-home hours for the period 1 July 2025 to 30 June 2026.
[PLACEHOLDER Download the FY2026 Working from Home Diary — PLACEHOLDER Dropbox link]
Complete the spreadsheet using actual records such as calendars, timesheets, rosters and work schedules.
The spreadsheet is a record-keeping aid. Completing it does not automatically establish that every hour or expense is deductible. We will review the completed record before preparing your return.
Bills and Receipts Required for the Fixed-Rate Method
In addition to the hours record, keep evidence showing that you incurred additional running expenses.
Depending on the expenses you incurred, keep:
at least one monthly or quarterly electricity bill;
at least one monthly or quarterly gas bill, if applicable;
at least one internet bill;
at least one mobile or home phone bill, if applicable;
at least one receipt for stationery or computer consumables, if applicable.
The record should show:
the type of expense;
the amount;
the supplier;
the billing period; and
that you incurred or contributed to the cost.
Bill is in your spouse’s or housemate’s name
A bill does not necessarily have to be solely in your name, but you need evidence that you contributed to the expense.
Evidence may include:
joint bank account payments;
transfers to the person named on the bill;
joint credit card statements;
lease or household arrangements;
other evidence showing that you shared the cost.
Simply living at the property is not sufficient. Paying ordinary board to a family member will not necessarily establish that you incurred the household running expense.
Fixed-Rate Example
Priya works from home two days each week. Her diary shows:
46 working weeks during FY2026;
2 days worked from home each week;
7.5 actual hours each day after excluding breaks.
Hours calculation
46 weeks × 2 days × 7.5 hours
= 690 hours
Fixed-rate deduction
690 hours × A$0.70
= A$483.00
The A$483 covers Priya’s work-related electricity, gas, phone usage, internet usage, stationery and computer consumables for the income year.
Priya may separately claim eligible depreciation or immediate deductions for equipment that she purchased and used for work.
What If You Did Not Keep a Diary?
Not having the prepared spreadsheet does not automatically mean that no other records exist.
We may be able to review contemporaneous records such as:
employer timesheets;
work rosters;
electronic calendars;
VPN or system access logs;
meeting records;
payroll attendance records;
diary entries;
emails showing working patterns.
These records must establish actual hours. A general recollection or retrospective estimate is not sufficient.
If reliable records cannot establish actual hours for the full year, the fixed-rate method may not be available.
The actual-cost method may still be considered, but only where adequate expense records and a reasonable apportionment calculation exist. It is not an automatic alternative where no records were kept.
Method 2 - Actual-Cost Method
The actual-cost method allows you to claim the actual additional work-related expenses incurred because you worked from home.
This method may be worthwhile where:
you work from home extensively;
your actual electricity or internet costs are unusually high;
you have a dedicated office;
you use energy-intensive equipment;
you have detailed bills and usage records; or
the properly calculated actual cost exceeds the fixed-rate result.
The actual-cost method has substantially more record-keeping requirements.
Expenses Under the Actual-Cost Method
Depending on your circumstances, the actual-cost method may include the work-related portion of:
electricity and gas;
home and mobile internet;
home and mobile phone usage;
stationery and computer consumables;
cleaning a dedicated home office;
depreciation of furniture and equipment;
repairs and maintenance of work-related equipment.
Only the additional work-related cost is deductible. Normal private household expenditure remains private.
Electricity and Gas
You need a fair and reasonable calculation of the additional energy used while working from home.
A calculation may consider:
power consumption of the equipment;
hours the equipment was used;
electricity cost per kilowatt hour;
heating, cooling and lighting use;
whether other household members were using the same area or appliance;
whether the expense would have arisen anyway.
A basic equipment calculation may use:
Power consumption per hour × hours used × electricity rate
Heating and cooling calculations may require further apportionment where the appliance services the entire home rather than only the work area.
A percentage of the whole electricity bill cannot be claimed merely because you worked from home. The calculation must identify the additional work-related component.
Internet and Phone Usage
Under the actual-cost method, work-related phone and internet usage must be calculated separately.
A reasonable calculation may use:
itemised calls;
work calls compared with total calls;
work-related data usage;
time used for work compared with total use;
router or device usage records;
a representative diary where the usage pattern is stable.
Where a representative period is used, it should normally cover at least four weeks and reflect the person’s usual pattern.
If the usage pattern changes materially during the year, separate representative periods or full-year records may be needed.
The four-week representative-period approach may assist with actual-cost apportionment. It does not replace the requirement for actual full-year hours under the fixed-rate method.
Stationery and Computer Consumables
Under the actual-cost method, claim the actual work-related cost of items such as:
paper;
printer ink;
pens;
notebooks;
folders;
postage;
other consumable office supplies.
Where supplies are also used privately, only the work-related portion can be claimed.
Cleaning a Home Office
Cleaning expenses may be deductible where you have a separate room or clearly identifiable area set aside as a home office.
A reasonable claim may be based on:
floor area of the dedicated office;
time the room was used for work;
actual cleaner invoices;
actual cleaning supplies used for the office.
You generally cannot claim cleaning costs for shared domestic areas such as the kitchen, lounge room or dining area merely because you occasionally worked there.
Cleaning a separate home office may also be claimed separately where the fixed-rate method is used, because cleaning is not included in the 70-cent rate.
Equipment and Office Furniture
Equipment and furniture may include:
laptops and desktop computers;
monitors;
printers;
mobile phones;
keyboards and computer mice;
desks;
office chairs;
filing cabinets;
headsets;
webcams;
lamps;
power boards and chargers.
You can only claim the work-related portion.
Assets Costing A$300 or Less
An employee may generally claim an immediate deduction for an asset costing A$300 or less where:
it is used mainly to earn non-business assessable income;
it is not part of a set costing more than A$300;
it is not one of several identical or substantially identical items that together cost more than A$300; and
the taxpayer paid for it and was not reimbursed.
Private use must still be deducted.
Example
Maria buys a keyboard for A$180 and uses it:
80% for employment duties;
20% privately.
Potential immediate deduction:
A$180 × 80%
= A$144
Assets Costing More Than A$300
Assets costing more than A$300 are generally claimed through depreciation over their effective life.
You may generally choose:
prime cost method — a more even deduction over the asset’s effective life; or
diminishing value method — a higher deduction in the earlier years and lower deductions in later years.
The claim must take account of:
purchase date;
asset cost;
effective life;
depreciation method;
days held during the income year;
work-use percentage;
prior-year depreciation.
Once a depreciation method is chosen for an asset, it generally cannot be changed for that asset.
We will calculate the allowable decline in value after reviewing the purchase invoice, use and prior-year records.
Employer-Provided or Reimbursed Equipment
You cannot claim equipment that:
your employer purchased;
your employer supplied for your use;
your employer reimbursed;
another person paid for on your behalf.
If the employer reimbursed only part of the cost, the treatment of the remaining amount should be reviewed.
Occupancy Expenses - Rent, Mortgage Interest and Rates
Occupancy expenses include:
rent;
mortgage interest;
council rates;
land tax;
house insurance.
Employees
Employees generally cannot claim occupancy expenses merely because they:
work from home regularly;
are required to work from home;
have a spare room used as an office;
purchased a larger home to accommodate an office;
are not reimbursed;
were not provided with a desk or equipment by their employer.
Occupancy expenses may only arise in exceptional employee circumstances where part of the home has the character of a genuine place of business.
Relevant factors include whether:
the employer provides no alternative place to work;
the nature of the work inherently requires a place of business;
the area is used exclusively or almost exclusively for work;
the area is not readily suitable for private or domestic use;
the area is clearly identifiable as a place of business;
clients or customers regularly attend the premises.
A spare bedroom containing a desk will not automatically meet these tests.
Our conservative position is that ordinary employees should not claim rent, mortgage interest, rates or home insurance unless the strict place-of-business requirements have been reviewed and satisfied.
Sole Traders and Home-Based Businesses
A sole trader may be able to claim a portion of occupancy expenses where an area of the home has the character of a place of business.
Indicators may include:
the business is mainly operated from the home;
the area is clearly identifiable as business premises;
it is not readily adaptable for normal private use;
it is used exclusively or almost exclusively for business;
clients or customers regularly visit;
there is no other main business premises.
The claim may be apportioned by floor area and time.
Important CGT warning
Using part of a home as a place of business can affect the main residence CGT exemption when the property is sold.
CGT consequences may arise where the interest deductibility test is satisfied, even if the taxpayer elects not to claim mortgage interest.
PSI warning
The personal services income rules may restrict occupancy expense deductions for some contractors and sole traders.
Do not claim occupancy expenses without obtaining advice on:
income tax deductibility;
CGT consequences;
PSI;
GST, where relevant;
documentation and apportionment.
Common Questions
Can I use the fixed rate if I worked at the dining table?
Potentially yes. A dedicated office is not required for the fixed-rate method, provided you performed substantive work duties, incurred additional expenses and kept the required records.
Can I claim eight hours for every rostered home day?
Only if you actually worked eight deductible hours. Unpaid lunch breaks, private interruptions, leave and non-working time must be excluded.
Can I use a four-week diary and multiply it across the year?
Not for fixed-rate hours. Actual hours must be recorded for the full income year.
A representative period may be relevant to particular actual-cost apportionments, such as stable phone or internet usage.
Can I separately claim my internet because I use it heavily for work?
Not if you use the fixed-rate method. Internet usage is included in the 70-cent rate.
You may compare the actual-cost method, but you will need full bills and a defensible work-use calculation.
Can I separately claim work phone calls made outside my home?
Not if you use the fixed-rate method. The rate covers the work-related usage of your home and mobile phone for the income year.
The handset’s decline in value may be separately claimable.
Can my spouse and I both claim working-from-home expenses?
Potentially yes, if each person:
performs their own income-producing duties from home;
incurs additional expenses;
keeps their own actual-hours record;
is not reimbursed; and
satisfies the chosen method’s requirements.
Shared household bills do not automatically prevent a claim, but each person must be able to show that they contributed to the cost.
Can I claim the cost of coffee, tea or meals consumed at home?
No. Ordinary food and drink consumed while working from home remain private living expenses.
Can I claim furniture already owned for many years?
Possibly, but only if the asset still has an adjustable value and has not already fully depreciated. We need the original purchase date, cost and prior use where available.
Can I claim a desk that the whole family uses?
Only the work-related portion. A 100% deduction is not appropriate where there is material private or family use.
Can I claim rent because my employer requires me to work remotely?
Not automatically. Being permitted or required to work remotely does not, by itself, turn part of the home into a place of business.
What to Provide for Your 2026 Tax Return
Please provide:
Hours
completed FY2026 Working from Home Diary;
employer timesheets or rosters;
calendar or work schedule where relevant;
explanation of any unusual working pattern.
Household expenses
electricity bill;
gas bill, if applicable;
internet bill;
mobile or home phone bill;
evidence of contribution where bills are in another person’s name.
Equipment
purchase invoices;
purchase date;
description of each item;
work-use percentage;
details of private use;
employer reimbursement details;
prior depreciation information for assets purchased in earlier years.
Actual-cost method
If requesting an actual-cost calculation, also provide:
all relevant annual bills;
four-week usage diary where appropriate;
electricity usage calculation;
phone and internet work-use calculation;
dedicated office measurements;
cleaning invoices;
explanation of the apportionment method.
Home-based business
If requesting occupancy expenses, provide:
floor plan and office measurements;
photographs of the work area;
rent or mortgage interest records;
rates and insurance;
evidence that the area is a genuine place of business;
client attendance records;
details of any other business premises;
dates the area was used as a place of business.
Records to Keep
Generally, retain your working-from-home records for at least five years after lodging the relevant tax return.
Keep:
hours records;
bills;
receipts;
invoices;
calculations;
work-use diaries;
depreciation schedules;
employer reimbursement records;
evidence of shared household payments.
Records relating to depreciating assets, home occupancy expenses or CGT consequences may need to be retained for longer.
Final Reminder
The largest possible deduction is not always the correct deduction.
We will compare the fixed-rate and actual-cost methods where sufficient records are available and use the method that provides the best lawful, supportable result.
Unsupported estimates, double claims and private household expenses may be denied by the ATO.
Please bring the records and explain your circumstances before lodging.