Working From Home Tax Deductions Australia 2026: Revised Fixed Rate Method
The ATO's working from home deduction rules were significantly overhauled from 1 July 2022. The revised fixed rate method, now at 70 cents per hour, replaced the old 80 cents shortcut method and the old 52 cents fixed rate. Understanding which method to use — and what records to keep — can make a material difference to your tax refund. For someone working from home 40 hours per week, 48 weeks per year, the deduction is $1,344 under the fixed rate method. But you may also be able to claim additional equipment, phone, and internet costs on top.
The Two ATO Methods for 2025-26
From 1 July 2022, the ATO offers two methods for calculating WFH deductions. You must choose one per financial year — you cannot mix methods.
Method 1: Revised Fixed Rate (67 cents/hour from FY2022-23)
You claim 67 cents per hour for every hour worked from home. This rate covers: electricity and gas (heating, cooling, lighting), internet (the work-use portion), phone (the work-use portion), and stationery and consumables. You cannot separately claim any of these expenses — they are all bundled into the 67 cents rate.
You can additionally claim (separately, outside the 67 cents):
- Decline in value of depreciating assets — e.g., desk, chair, monitor, webcam
- Repairs and maintenance of dedicated WFH equipment
- Cleaning a dedicated home office space
Method 2: Actual Cost Method
You calculate the actual additional running costs of your home due to working from home — electricity, gas, internet, phone — based on usage and a reasonable apportionment formula. This method requires more record keeping but can result in higher deductions if your actual costs exceed the fixed rate equivalent. You must have a dedicated work area (a room used exclusively as an office) to claim occupancy costs (rent, mortgage interest, rates, insurance) — though this triggers a partial capital gains tax liability on your home when you sell.
| Hours WFH per week | Weeks per year | Total hours | Deduction at 67c/hr |
|---|---|---|---|
| 10 (1 day) | 48 | 480 | $322 |
| 20 (2 days) | 48 | 960 | $643 |
| 30 (3 days) | 48 | 1,440 | $965 |
| 40 (full week) | 48 | 1,920 | $1,286 |
| 40 (full week) | 52 | 2,080 | $1,394 |
Record Keeping Requirements
The ATO's record keeping requirements changed significantly from 1 March 2023. For the fixed rate method, you must keep:
- A representative record of actual hours worked from home — a diary, timesheet, roster, or screenshot of calendar for a 4-week representative period (not an estimate or declaration)
- At least one bill or statement for each expense covered by the 67 cents rate — an electricity bill, an internet bill, or a phone bill from the relevant year
- Evidence of purchase for any additional equipment claimed (decline in value)
The ATO has indicated that a declaration of "I worked X hours from home" without a contemporaneous record is not sufficient. If audited, you need evidence — not just a best-guess figure.
Important note for FY2022-23 only: For the first year the new method applied, the ATO allowed records from 1 March 2023 only (the start date of the requirement). Hours worked before March 2023 could be estimated based on reasonable basis.
Equipment, Furniture, and Technology Claims
Under both methods, you can claim the work-use proportion of depreciating assets you purchased for working from home. Common claims include desk, office chair, monitor, keyboard, mouse, headset, webcam, and printer.
Items costing $300 or less can be immediately deducted. Items costing over $300 must be depreciated over their effective life. The ATO publishes effective life tables — a computer typically has an effective life of 4 years (25% depreciation per year). If your laptop cost $2,000 and you use it 80% for work, annual depreciation deduction = $2,000 × 25% × 80% = $400.
For employees who work both in an office and at home, only the additional equipment specifically used for the home office (not already provided by your employer at your regular workplace) is deductible.
Occupancy Expenses and the CGT Risk
Most WFH employees should not claim occupancy expenses (rent, mortgage interest, council rates). Occupancy expenses require a room used exclusively and regularly for work — a dedicated home office. If you claim occupancy expenses and later sell your home, the ATO may apply capital gains tax to the proportion of your home used for income-producing purposes. For homeowners, this can be a significant cost that far outweighs the modest occupancy deduction. Unless you have a genuine home office that is never used for personal purposes, avoid claiming occupancy expenses.
Frequently Asked Questions
- Can I claim WFH deductions if I was not told to work from home by my employer?
- Generally yes. The deduction is available for additional running expenses incurred while performing employment duties from home — you do not need a formal work-from-home arrangement. However, if your employer provides a workspace at their office that you chose not to use, some expenses (particularly internet) may be harder to justify as an employment-related expense.
- Can I claim my entire internet bill?
- Under the fixed rate method, no — internet is already included in the 67 cents rate. Under the actual cost method, you can claim the work-use portion of your internet based on a reasonable apportionment — if you use the internet 30% for work, claim 30% of the bill. You also need a copy of at least one bill as evidence.
- My employer pays me a WFH allowance. Can I still claim deductions?
- If your employer pays you a WFH allowance, you must include it as income — but you can still claim actual WFH expenses against that income. If the allowance covers all your WFH costs exactly, the net deduction may be zero. If your actual costs exceed the allowance, the excess is deductible. Keep records to support the claimed amount.
