Working from home has become a normal part of employment for many Australians, but working from home does not automatically mean every home-office expense is tax-deductible.

The Australian Taxation Office (ATO) has specific requirements for claiming working from home expenses, including rules around eligibility, record keeping and how you calculate the work-related portion of your costs. For the 2025–26 income year, eligible employees can choose between the fixed-rate method and the actual-cost method.

As John Saade, CEO of Latitude Accountants, regularly highlights through practical tax advice, understanding what you can legitimately claim—and keeping the right records to support it—is just as important as looking for deductions in the first place.

This guide explains how working from home tax deductions work in Australia and what you need to know before including them in your tax return.

Can You Claim Working From Home Expenses on Tax?

Yes, eligible employees may be able to claim certain additional expenses they incur because they work from home.

However, there are several conditions you need to satisfy.

Generally, you must:

• Work from home to perform your employment duties, rather than simply completing minor tasks.
• Incur additional running expenses because you work from home.
• Keep records that support your claim.
• Only claim the work-related portion of expenses.
• Not claim expenses that your employer has already reimbursed.

Simply having a laptop at home or occasionally checking emails does not automatically make you eligible for a working from home deduction.

What Working From Home Expenses Can You Claim?

Depending on the calculation method you use, eligible expenses may include:

• Electricity and gas used for heating, cooling and lighting
• Internet and data expenses
• Mobile and home phone usage
• Stationery
• Computer consumables
• Office equipment
• Computers and laptops
• Office furniture
• Repairs and maintenance of eligible work-related equipment
• Cleaning expenses in certain circumstances

The amount you can claim depends on the expense, your work-related use and the method you choose.

The Two Methods for Calculating Working From Home Deductions

For the 2025–26 income year, eligible taxpayers can generally choose between:

1. The fixed-rate method
2. The actual-cost method

You should consider which method produces the appropriate deduction based on your circumstances and the records you have available.

The Fixed-Rate Method

For the 2025–26 income year, the ATO’s fixed-rate method allows eligible taxpayers to claim 70 cents per hour worked from home.

The fixed rate covers certain additional running expenses, including:

• Electricity and gas
• Internet and data
• Mobile and home phone usage
• Stationery
• Computer consumables

You cannot claim a separate deduction for those expenses that are already covered by the fixed rate.

However, eligible expenses not covered by the fixed rate—such as the work-related decline in value of certain equipment—may potentially be claimed separately.

What Records Do You Need for the Fixed-Rate Method?

You need records showing the actual hours you worked from home for the entire income year.

Examples may include:

• Timesheets
• Rosters
• A work diary
• Other reliable records showing your working-from-home hours

You also need evidence that you incurred the expenses covered by the fixed rate.

This is important because you cannot simply estimate your working-from-home hours at tax time.

The Actual-Cost Method

The actual-cost method works differently.

Instead of applying a set hourly rate, you calculate the actual additional expenses you incurred because you worked from home.

Depending on the circumstances, this may include the work-related portion of:

• Electricity and gas
• Internet
• Phone expenses
• Stationery
• Computer consumables
• Equipment
• Office furniture
• Repairs and maintenance
• Cleaning of a dedicated home office

The actual-cost method requires more detailed calculations and supporting records.

How Does the Actual-Cost Method Work?

You generally need to determine the work-related portion of each expense using a reasonable basis.

For example, if your internet connection is used for both work and personal activities, you cannot automatically claim the entire bill.

You need evidence supporting the percentage that relates to your employment.

The same principle applies to other expenses with both private and work-related use.

Fixed Rate vs Actual Cost: Which Method Is Better?

There is no single method that is best for everyone.

The best approach depends on your working arrangements, expenses and record keeping.

Rather than choosing a method simply because it sounds easier, consider which method accurately reflects your circumstances.

Can You Claim Your Internet Bill When Working From Home?

Potentially, yes.

Internet expenses can form part of a working from home deduction where you meet the relevant requirements and incur additional expenses because of working from home.

Under the fixed-rate method, internet and data expenses are included in the hourly rate, meaning you generally cannot claim them separately.

Under the actual-cost method, you may calculate the work-related portion of your actual internet costs.

If you use your internet for both personal and employment purposes, you need to appropriately apportion the expense.

Can You Claim Electricity When Working From Home?

Electricity and gas expenses may also be claimable where you incur additional costs because of working from home.

These costs are included in the fixed-rate method.

If you use the actual-cost method, you need to calculate the additional work-related portion using an appropriate method and retain supporting records.

Can You Claim a Laptop, Monitor or Office Furniture?

Potentially.

Equipment such as:

• Laptops
• Computers
• Monitors
• Desks
• Office chairs
• Other work-related equipment

may potentially qualify for a deduction, depending on the circumstances and the relevant tax rules.

The treatment can depend on the item’s cost, how it is used and whether it is a depreciating asset.

The ATO notes that the decline in value of eligible depreciating assets used for work can potentially be claimed separately under the applicable working-from-home methods.

What If You Use the Equipment Personally?

If an item is used for both work and private purposes, you generally cannot claim the entire cost.

You need to determine the appropriate work-related portion.

For example, if a laptop is used 80% for employment and 20% privately, the deduction needs to reflect the relevant work-related use, subject to the applicable rules.

Can You Claim Rent or Mortgage Interest?

This is an area where taxpayers need to be particularly careful.

Employees working from home generally cannot claim occupancy expenses such as rent, mortgage interest or home insurance simply because they work from home.

The rules surrounding occupancy expenses can be more complicated in certain circumstances, including where specific home-based business arrangements apply.

If you are operating a business from home rather than simply working remotely as an employee, seek professional advice before assuming the employee working-from-home rules apply to you.

What Records Do You Need to Keep?

Good record keeping is essential.

Depending on the method and expenses you claim, records may include:

• Timesheets
• Rosters
• Work diaries
• Electricity bills
• Internet bills
• Phone bills
• Receipts
• Tax invoices
• Equipment purchase records
• Calculations showing work-related use
• Records supporting depreciation calculations

The ATO specifically states that taxpayers need records supporting both their working-from-home hours and expenses.

A bank or credit card statement on its own may not always provide sufficient evidence of a work-related expense.

Common Working From Home Tax Mistakes

Working from home deductions can become problematic when taxpayers assume that anything used during work hours is automatically deductible.

Common mistakes include:

• Claiming 100% of a mixed-use expense
• Estimating work-from-home hours without adequate records
• Claiming expenses already reimbursed by an employer
• Claiming internet or phone costs separately when already included in the fixed rate
• Claiming personal expenses as work expenses
• Claiming rent or mortgage interest without checking eligibility
• Failing to keep receipts and supporting documents
• Assuming the most expensive calculation method automatically produces the correct deduction

The key principle is simple: claim what you are entitled to claim and keep evidence to support it.

How to Make Your Working From Home Tax Claim Easier

A little preparation throughout the year can make tax time much easier.

Track Your Working Hours

Keep a consistent record of the hours you work from home rather than trying to reconstruct them months later.

Keep Your Bills and Receipts

Save relevant bills and receipts for expenses that may form part of your claim.

Separate Work and Private Use

Where an expense has both work and private components, maintain records that help establish the work-related percentage.

Don’t Claim Reimbursed Expenses

If your employer has reimbursed you for an expense, you generally cannot also claim that same expense as a tax deduction.

Ask Before You Claim

If you are unsure whether an expense qualifies, getting professional advice before lodging your return can help prevent incorrect claims.

Why Professional Tax Advice Can Help

Working from home deductions may appear straightforward, but the correct calculation depends on your circumstances, expenses and records.

A tax professional can help you:

• Determine whether you are eligible
• Compare the available calculation methods
• Identify expenses you may be able to claim
• Calculate work-related portions
• Understand equipment and depreciation rules
• Review your supporting records
• Avoid incorrectly claiming personal expenses

This can be particularly valuable if you work from home extensively, have significant equipment costs, or operate a business from your home.

Frequently Asked Questions About Working From Home Tax Deductions

Can I claim working from home expenses if I work from home only a few days a week?

Potentially, yes. Eligibility depends on whether you work from home to perform your employment duties, incur additional expenses, and maintain the required records.

How much can I claim for working from home in 2025–26?

The fixed-rate method is 70 cents per hour for the 2025–26 income year if you meet the eligibility requirements. You may instead use the actual-cost method.

Can I claim my entire electricity bill?

Generally, no. You can only claim the eligible work-related portion under the applicable calculation method. Under the fixed-rate method, eligible energy costs are already incorporated into the hourly rate.

Can I claim my internet bill separately?

It depends on the method you use. Internet and data expenses are included in the fixed-rate method. Under the actual-cost method, you may calculate the eligible work-related portion of your actual costs.

Can I claim my home office furniture?

Potentially. Eligible work-related furniture and equipment may qualify for a deduction, including through the decline-in-value rules where applicable. The treatment depends on the item and how it is used.

Can employees claim rent when working from home?

Employees generally cannot claim occupancy expenses such as rent or mortgage interest simply because they work from home. Specific circumstances can differ, so professional advice may be appropriate.

Get Professional Tax Advice From Latitude Accountants

Working from home can create legitimate tax deductions, but getting the calculation and record-keeping right is essential.

At Latitude Accountants, our team can help individuals and business owners understand their tax obligations, identify legitimate deductions and ensure their claims are supported by appropriate records.

If you are unsure about your working from home expenses or want professional help preparing your tax return, speak with the Latitude Accountants team.

Latitude Accountants

📍 Sydney Olympic Park | Marrickville | Melbourne | Loxton
📞 1300 706 597
📧 info@latitudeaccountants.com.au

Get in touch with Latitude Accountants to discuss your tax and accounting needs.

Disclaimer

This article provides general information only and does not constitute financial, taxation, legal or accounting advice. Tax laws and ATO requirements can change, and the correct treatment of working from home expenses depends on your individual circumstances. You should seek advice from a qualified accountant or registered tax professional before making decisions or lodging claims based on this information.