Working from home has become a way of life for many Australians. Whether you’re a full-time remote employee or a part-time freelancer, you might be missing out on valuable tax deductions. If you’re clocking in from your kitchen table or a dedicated home office, here’s how you can potentially reduce your tax bill with working from home tax deductions in Australia.
What Is a Work From Home Deduction?
When you work from home, you inevitably incur additional expenses — think heating, cooling, internet, stationery, and even depreciation of office equipment. The Australian Taxation Office (ATO) allows you to claim certain deductions for these work-related costs, as long as:
- You are working from home to fulfill your employment duties (not just occasionally checking emails).
- You incur additional running expenses due to working from home.
- You have records to prove your claims.
Note: You can’t claim deductions for costs that are reimbursed by your employer.
Claiming Methods for the 2023–24 Financial Year
Starting from 1 July 2022, the ATO introduced an updated fixed-rate method and retained the actual cost method. Here’s a breakdown of what each involves:
Fixed Rate Method
This method simplifies the process by allowing a fixed rate of $0.67 per hour worked from home. It covers:
- Electricity and gas
- Phone and internet usage
- Computer consumables (e.g., ink and paper)
- Stationery
You must keep a detailed record of hours worked at home — a calendar or diary will do.
What’s not included? Depreciation of assets like furniture or computers — these can be claimed separately.
Actual Cost Method
This method requires you to calculate the actual expenses incurred from working at home, including:
- Actual utility costs
- Internet and phone bills (work-related portion)
- Equipment depreciation
- Cleaning of a dedicated home office
You must have evidence of all expenses and how you calculated the work-related portion.
Comparison Table
| Category | Fixed Rate Method ($0.67/hour) | Actual Cost Method |
|---|---|---|
| Utility Costs (electricity, gas) | âś… Included in rate | âś… Must calculate proportion |
| Internet and phone usage | âś… Included in rate | âś… Calculate work-related % |
| Stationery and consumables | âś… Included in rate | âś… Calculate and prove usage |
| Depreciation of office furniture | ❌ Claimed separately | ✅ Claimable |
| Cleaning expenses | ❌ Not included | ✅ Claimable (only for dedicated home office) |
| Recordkeeping | Record of hours worked + at least one bill | Receipts + detailed records of expense calculations |
What You Can’t Claim
While the deductions seem generous, there are limitations. You cannot claim:
- Rent, mortgage interest, or council rates (unless you’re a business owner, not just an employee).
- Expenses for children or pets being at home.
- Gym memberships or lunch expenses, even if working from home makes them higher.
Recordkeeping Requirements: Protect Your Claim
To maximise your deductions legally and avoid penalties, accurate records are essential. Keep:
- A log of daily hours worked from home.
- Copies of utility and phone bills showing work-related usage.
- Receipts for equipment and supplies.
- Records of any depreciation calculations.
More details can be found directly from the Australian Taxation Office on home office expenses.
Wrap-Up: Are You Leaving Money on the Table?
Understanding your working from home tax deductions in Australia means more money in your pocket — if you do it right. Evaluate which method suits you best, keep meticulous records, and don’t forget to consult a tax professional if needed. With the right strategy, working from home can be good for your career — and your wallet.
Sufiyan, a passionate IT professional and finance enthusiast dedicated to simplifying financial clarity for every Australian. With years of experience in both tech and personal finance, Sufiyan oversees all content to ensure accuracy, usability, and relevance.