If you worked from home at any point during 2025–26 — whether a full-time remote arrangement or one day a week at the kitchen table — you can generally claim a deduction for the additional costs of doing so. The ATO gives you two ways to calculate the claim, and the difference between them can run to hundreds of dollars, so it is worth understanding both before your return is prepared.
Three things must be true before you can claim anything: you were genuinely carrying out your employment duties from home (occasionally checking emails does not count), you incurred additional running costs as a result, and you have records to prove both. With those boxes ticked, you choose one of the methods below for the year.
Method one: the fixed rate — 70 cents per hour
Under the fixed rate method, you claim 70 cents for every hour you worked from home during 2025–26. That single rate covers your additional costs for:
- energy — electricity and gas for heating, cooling and lighting
- internet and data
- mobile and home phone usage
- stationery and computer consumables such as ink and paper
Because those categories are bundled into the rate, you cannot claim any of them again separately — not even the work portion of your mobile bill for calls made away from home.
What you can claim on top of the 70 cents is the decline in value (depreciation) of equipment and furniture you use for work — a laptop, monitor, desk, office chair or bookshelf — along with the cost of repairing and maintaining those items. Items costing $300 or less that are used entirely for work can usually be deducted in full straight away; dearer items are depreciated over their effective life, apportioned for any private use.
Method two: actual cost
The actual cost method does what it says: you work out the real additional cost of each expense — energy, internet, phone, stationery, consumables, depreciation, and cleaning of a dedicated home office — and claim only the work-related portion of each. It can produce a larger deduction if your running costs are high, for example a dedicated office you heat or cool all day, or power-hungry equipment.
The trade-off is paperwork. You need receipts or bills for every expense you claim, plus records showing how you split each cost between work and private use — for instance a four-week diary showing your usual pattern of internet or device use, applied across the year. For most employees with ordinary set-ups, the fixed rate ends up both simpler and similar in value.
The two methods at a glance
| Fixed rate (70c/hour) | Actual cost | |
|---|---|---|
| How it works | Hours worked from home × $0.70 | Work-related share of each actual expense |
| Covers | Energy, internet, phone, stationery and consumables | Each expense claimed individually |
| Claimed separately | Depreciation of equipment and furniture, plus repairs | Nothing — everything is itemised within the method |
| Records needed | Full-year record of hours, plus one bill per expense type | All receipts and bills, plus work-use apportionment records |
| Best suited to | Most employees with typical home set-ups | High running costs or a dedicated, heavily used office |
The records the ATO now expects
Record-keeping is where working-from-home claims most often come unstuck. To use the fixed rate method you must keep:
- a record of all the hours you worked from home across the entire year — timesheets, rosters, a diary kept as you go, or logs from your employer’s systems. Estimates are not accepted, and the old four-week “representative” diary of hours has not been accepted since 1 March 2023 — the record must cover the full year
- at least one bill or receipt for each category the rate covers — one electricity bill and one internet bill, for example — showing you actually incurred those costs
- purchase receipts for any equipment you depreciate, with a record of how you worked out its work-related percentage.
A worked example
The figures below are an illustration only — your own numbers will differ. Priya, an analyst, worked from home two days a week through 2025–26. Her rosters and timesheets show 720 hours at home.
- Fixed rate claim: 720 hours × $0.70 = $504
- Laptop bought in July 2025 for $1,650, used 80% for work, depreciated over a two-year effective life: $660 this year
- Office chair costing $285, used solely for work: $285 in full
Total deduction: $1,449. When we tested the actual cost method, her work-related share of energy, internet and phone came to noticeably less than $504 — so the fixed rate left her ahead, with far less paperwork.
Mistakes that trip people up every year
- Double-dipping on phone and internet. Claiming your mobile or broadband bill on top of the fixed rate is the most common error we see — the 70 cents already includes them.
- Claiming occupancy costs. Rent, mortgage interest, council rates and home insurance are not deductible for employees who simply work from home. They are only available in limited cases where your home is genuinely a place of business — and claiming them can expose part of your home to capital gains tax, so seek advice first.
- Relying on estimates or old shortcuts. “About three days a week” is no longer an acceptable basis for your hours, and the four-week representative diary disappeared several years ago. No contemporaneous record, no fixed rate claim.
Choosing the better method — and making sure the records behind it will stand up — is bread-and-butter work for a registered tax agent. We run both calculations for every working-from-home client, claim the depreciation that is often forgotten, and flag anything in your claim the ATO is likely to question. Get in touch before you lodge and we will make sure nothing is left on the table.