Worked Examples and Checklists
Working from home deductions: 70c fixed rate vs actual cost, worked out
Compare the ATO's 70 cents per hour fixed rate with the actual cost method using a worked example, the records each needs and what can still be claimed separately.
Employees who work from home can usually claim their extra running costs in one of two ways. The fixed rate method gives 70 cents for each hour you work from home in 2024–25 and 2025–26, covering energy, internet, phone, stationery and computer consumables, and you can add depreciation of equipment separately. The actual cost method claims the real work-related share of each expense, which needs more detailed records but can give a larger deduction if your costs are high. For most people with moderate costs the two give similar results; the fixed rate is far simpler. Either way, you need a record of the actual hours you worked from home.
This guide works through both methods for the same person, then lists the records and mistakes that cause claims to be reduced. It uses the work-from-home calculator and builds on the step-by-step tax guide. The figures are illustrative and the guide is general information.
The rules both methods share
You can claim only if:
- you were working from home to fulfil your employment duties, not just doing minimal tasks such as occasionally checking emails;
- you incurred additional running expenses as a result; and
- you have records showing the expenses and your hours.
You cannot claim costs your employer reimbursed. Employees generally cannot claim occupancy expenses, such as rent, mortgage interest, council rates or home insurance, unless the home is genuinely a place of business, which is rare for employees.
Method 1: the fixed rate (70c per hour)
| Covered by the rate (no separate claim) | Can be claimed separately |
|---|---|
| Electricity and gas for heating, cooling and lighting | Depreciation of a desk, chair, monitor or laptop |
| Internet | Repairs and maintenance of those assets |
| Mobile and home phone | Cleaning a dedicated home office (only in limited cases) |
| Stationery and computer consumables such as printer ink |
Records: a record of the actual hours you worked from home for the whole income year (rosters, timesheets, diaries or logs kept as you go; an estimate or a four-week sample is not enough since 1 March 2023), plus one document for each type of expense covered, such as one electricity bill and one phone bill, showing you incurred it.
Illustrative calculation: 3 days a week at home, 7.5 hours a day, 46 working weeks = 1,035 hours. Deduction = 1,035 × $0.70 = $724.50. Add depreciation of a $1,200 laptop used 60% for work: using the prime cost method over a two-year effective life, that is $600 × 60% = $360 for a full first year. Total about $1,084.
Method 2: actual cost
You calculate the work-related share of each expense. This takes a diary or other evidence of how much of each cost relates to work, and the usage records must cover the year or be representative of it.
Same person, illustrative figures:
| Expense | Annual cost | Work-related share | Claim |
|---|---|---|---|
| Electricity for office heating/cooling, lighting and devices | calculated from appliance wattage, hours and tariff | – | $310 |
| Internet | $900 | 35% (from a usage diary) | $315 |
| Mobile phone | $660 | 30% | $198 |
| Stationery and ink | $90 | 100% | $90 |
| Laptop depreciation | – | 60% | $360 |
| Total | $1,273 |
The actual cost claim is about $190 larger here. At a 32% marginal rate that is worth about $61 of tax, in exchange for itemised bills, a usage diary and an energy calculation. For someone with high cooling costs, a dedicated room and expensive internet, the gap can be larger; for others the fixed rate wins.
Choosing between them
| Situation | Usually simpler or better |
|---|---|
| Few records beyond your hours log | Fixed rate |
| Large dedicated office, high energy use, several devices | Actual cost may be higher |
| You share bills with a housemate or partner | Fixed rate avoids apportioning each bill, but you still need one bill in your name or proof you contributed |
| You worked from home only occasionally | Fixed rate, but only for the hours you actually worked |
| Your 2026–27 work claims would total less than $1,000 | The standard deduction may give more without records (below) |
You can choose a method each year; you do not have to use the same one as last year.
The $1,000 standard deduction from 2026–27
The standard deduction for work-related expenses is now law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (assented 26 June 2026) added section 25-130 to the Income Tax Assessment Act 1997 for the 2026–27 income year onwards. If you are an Australian resident with employment-type income (salary, wages, director's fees and similar payments subject to withholding), you can deduct up to $1,000, capped at that income, without receipts.
The $1,000 is reduced, dollar for dollar, by the work-related deductions you itemise against that income: general work expenses (including working from home), car expenses, travel between workplaces, and depreciation or repairs of work equipment. Income protection premiums and union or professional association fees do not reduce it. In effect you get the larger of $1,000 and your itemised work claims. Someone with a $1,084 itemised claim would weigh the extra $84 against the record-keeping effort; someone with $400 of claims receives the same $1,000 total either way. See the Federal Register of Legislation and the ATO's standard deduction page.
Mistakes that get claims reduced
- Estimating hours at the end of the year. The ATO asks for records kept during the year.
- Claiming phone and internet separately on top of the fixed rate. They are already included.
- Claiming while also being reimbursed. If your employer paid an allowance or reimbursement, the treatment differs; check your income statement.
- Claiming an entire laptop immediately. Only items costing $300 or less can generally be claimed outright; others are depreciated, and private use must be removed.
- Claiming occupancy costs. For employees these are almost never deductible, and claiming them can also affect the main residence CGT exemption.
More mistakes are listed in work-related deduction mistakes.
FAQ
Is the 2026–27 fixed rate still 70 cents?
The ATO publishes the rate for each year. At the time of writing it showed 70c for 2024–25 and 2025–26; check the ATO page before claiming for 2026–27.
Can I claim if I work from my kitchen table?
Yes. A dedicated room is not required for the fixed rate method.
My partner and I both work from home. Can we both claim?
Yes, each for your own hours, provided each of you incurred the expenses.
How long do I keep records?
Generally five years from the date you lodge the return.
Sources
- Australian Taxation Office — working from home expenses, fixed rate method, actual cost method, depreciation of assets, standard deduction for work-related expenses
- The Treasury — consultation material on the standard deduction
Related: tax return documents checklist, negative gearing example.
