Updated June 2025

With remote work remaining a common arrangement for many Australians, it’s important to understand how to claim tax deductions for your working from home expenses. The ATO has increased the fixed rate allowance for the 2024-2025 financial year, which means taxpayers can claim more for their home office costs in their upcoming tax return.

This article details the latest work from home tax deduction methods and eligibility requirements and explains how to maximise your home office tax deductions while staying compliant with ATO rules.

Can I claim work-from-home deductions in my tax return?

To claim WFH tax deductions, you must:

Be working from home to fulfil your employment duties, not just doing minimal tasks like occasionally checking emails or taking calls
Incur additional expenses as a direct result of working from home
Have records to substantiate your claims.

Current methods for claiming work from home expenses

For the 2024-25 financial year, there are two ATO-approved methods for claiming home office expenses:

Revised fixed rate method: A simplified approach using a cents-per-hour rate
Actual cost method: A detailed approach claiming the exact expenses incurred.

Each method has different requirements and may result in different deduction amounts depending on your circumstances.

The revised fixed rate method for 2024-25

The revised fixed rate has increased for the 2024-25 financial year. The current rate is 70 cents per hour (up from 67 cents in 2023-24) for each hour you work from home.

How the fixed rate home office deduction works

To use the fixed rate method, you must:

Work from home while carrying out your employment duties or carrying on your business
Incur additional running expenses as a result of working from home
Keep records of the hours spent working at home for the whole income year via timesheets, a logbook, your roster or diary entries
Keep records that show the work-related portion of your expenses.

You can download our free WFH deduction diary to help you keep track of your hours.

What’s included in the 70 cents per hour fixed rate?

Here’s what’s included under the revised fixed rate WFH deduction method:

Internet expenses
Energy expenses (electricity and gas) for heating and cooling, lighting and powering electronic devices
Mobile and home phone expenses
Stationery and computer consumables (like printer paper and ink).

It’s important to understand that you can’t claim additional separate deductions for any of the above expenses under the fixed rate method. For example, if you use your mobile phone while working from home, you can’t claim your mobile bill as a separate deduction – this expense is covered under the 70 cents per hour fixed rate.

Additional expenses you can claim with the fixed rate method

While the fixed rate covers many common expenses, you can still claim additional deductions for:

The decline in value (depreciation) of home office equipment and furniture used for work (items costing more than $300)
Immediate deductions for home office equipment and furniture used for work (items costing less than $300)
Repair and maintenance costs for home office equipment
Cleaning expenses for a dedicated home office (if applicable)
Any other running expenses not covered by the fixed rate.

Do I need a separate home office space to claim the fixed rate work from home deduction?

One of the benefits of the revised fixed rate method is that you no longer need a dedicated office space to use this approach. You can work from any area in your home and still claim the fixed rate deduction.

You must record the total hours you work from home via a timesheet, logbook, roster or diary.
You must retain records of all your additional running expenses, like phone, internet and utility bills, and hold onto them for five years.

The actual cost method for home office tax deductions in 2024-2025

The actual cost method allows you to claim the exact expenses you incur when working from home. While this method requires more detailed record-keeping, it may result in a larger deduction if you have significant home office expenses.

How the actual cost deduction method works

To use this method, you must:

Incur additional running expenses as a result of working from home
Keep detailed records (receipts and other written evidence) showing:
- The amount spent on expenses
- The amount spent on depreciating assets used while working from home
- The percentage of work-related use for your expenses and assets.

You also need to keep a record of the hours you spend working from home via either:

A record of the total number of hours spent working at home for the whole income year via timesheets, a logbook, your roster or diary entries (download our free WFH deduction diary to help you keep track of your hours), or
A diary or logbook showing your WFH hours over a continuous four-week period.

It’s important to note that you can’t claim additional running expenses if other members of your household (who are not working from home) are in the same room as you while you’re working from home. So, if you work in the living room while your family members watch TV, you can’t claim the running costs for heating, cooling and heating because you’re not incurring any additional costs.

What you can claim under the actual cost method

Under this method, you can claim:

Home office running costs

The work-related portion of:

Electricity and gas for heating, cooling, and lighting
Cleaning expenses for a dedicated work area
Phone and internet expenses
Computer consumables and stationery.

Decline in value of depreciating assets

Depreciation of:

Office furniture (desks, chairs, bookshelves)
Computers, laptops, and tablets
Printers and scanners
Other electronic equipment used for work.

Record-keeping requirements for work from home claims

Regardless of which method you choose, good record-keeping is essential:

For the fixed rate method:

A record of hours worked from home (via timesheet, diary, roster or similar)
Evidence of expenses for any additional deductions claimed outside the fixed rate.

For the actual cost method:

Receipts for all expenses claimed
Evidence of how you calculated the additional running expenses as a result of working from home
A record of hours worked from home
Documentation showing the work-related use of assets.

Our free WFH deduction diary can help you track your hours and expenses.

The ATO website provides more guidance on how to calculate and retain evidence of your WFH running expenses.

Frequently asked questions about claiming home office expenses

Can I claim electricity for working from home?

Yes, you can claim electricity costs for heating, cooling, and lighting your work area. Under the fixed rate method, these costs are included in the 70 cents per hour rate. Under the actual cost method, you’ll need to calculate the work-related portion of your bill.

Can I claim my internet expenses?

Yes, you can claim work-related internet expenses. They’re covered by the fixed rate method, or you can calculate the work-related percentage under the actual cost method.

Can I claim my home office furniture?

Yes, you can claim depreciation on home office furniture such as desks and chairs. Under the fixed rate method, these are claimed separately from the cents-per-hour rate.

Can I claim rent or mortgage interest?

No, rent, mortgage interest, rates, and home insurance are private expenses. You can’t claim these expenses as tax deductions for working from home.

What if I only worked from home for part of the year?

You can still claim deductions for the period you worked from home. Keep records of the dates and hours worked from home during that period.

For more information, check out the ATO’s detailed guide on actual cost deductions.

How Davidsons can help with your work from home tax deductions

Our personal income tax return specialists and small business advisors are available to support you, either virtually or at our Geelong or Torquay offices.

You can reach out to us by:

completing an enquiry form
calling us on 03 5221 6399
emailing via info@davidsons.com.au.

Download our free income tax return resources

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This article was written by Tax and Business Services Director Kylie McEwan.

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.

Working from home tax deductions 2024-25