Work From Home Tax Deductions 2026: What You Can Claim (ATO Rules)

15 March 2026|6 min read

Complete guide to claiming work from home tax deductions in Australia for 2025-26. Compare the fixed rate and actual cost methods, know what records the ATO requires, and avoid common audit triggers.

Two methods: fixed rate vs actual cost

The ATO offers two methods for claiming work from home expenses from 1 July 2023 onwards. The revised fixed rate method lets you claim 67 cents per hour for every hour you work from home. This rate covers electricity, gas, phone, internet, stationery, and computer consumables in a single per-hour amount. You cannot claim any of those expenses separately on top of the 67c rate. The actual cost method requires you to calculate the precise work-related portion of every individual expense — your electricity bill, your internet plan, your phone usage, and any other running costs. This method is more work but can yield a larger deduction if your actual costs are high. For example, someone working from home 1,600 hours per year would claim $1,072 under the fixed rate method, but their actual electricity, internet, and phone costs might total $1,400 or more if they have a dedicated home office with high energy costs. You must choose one method for the entire income year — you cannot mix and match between the two.

What you can claim: internet, electricity, phone, furniture

Under the actual cost method, deductible expenses include the work-related percentage of your electricity and gas bills, internet costs, mobile and home phone bills, stationery and computer consumables such as printer ink, and depreciation on office furniture and equipment. If you purchase a desk, office chair, monitor, keyboard, or other equipment costing $300 or more, you must depreciate the item over its effective life rather than claiming the full cost immediately. Items under $300 can be claimed in full in the year of purchase. Under the fixed rate method, the 67c per hour covers electricity, gas, phone, internet, stationery, and consumables — but you can still separately claim depreciation on furniture and equipment, and the work-related portion of any items not covered by the rate. This means a $600 office chair or a $1,200 standing desk can be depreciated on top of your per-hour claim, making the fixed rate method more attractive than many people realise.

What you cannot claim: coffee, groceries, rent (usually)

The ATO is clear about what you cannot claim when working from home. General household expenses like coffee, tea, milk, snacks, and groceries are not deductible — even if you consume them while working. Mortgage interest and rent are only deductible if you have a dedicated room set aside exclusively as a home office, and even then you can only claim the proportional area of that room relative to the whole house. Council rates, home insurance, and water bills are similarly restricted to those with a dedicated workspace. Clothing is not deductible unless it is a compulsory uniform, protective gear, or occupation-specific (such as a chef's checked pants). General work clothing like business shirts, trousers, or shoes cannot be claimed. Children's education expenses, childcare fees, and general living costs are never deductible regardless of your work arrangements. The key principle is that the expense must have a direct connection to earning your income — general living costs fail this test.

Record keeping requirements

Record keeping is where most WFH claims fall apart during an ATO audit. Under the fixed rate method, you must keep a record of every hour you worked from home for the entire year. This can be a timesheet, diary, roster, or time-tracking app — but it must show the actual hours, not an estimate. You also need at least one bill for each expense category covered by the 67c rate (electricity, phone, internet) to prove you incurred the cost, even though you are not calculating actual amounts. Under the actual cost method, you need all bills and receipts for every expense you claim, plus a four-week representative diary showing the pattern of your work-from-home hours. You then extrapolate that pattern across the full year. For both methods, keep records for five years from the date you lodge your return. Digital records are acceptable — photos of receipts, PDF bills, and spreadsheets are all fine. The ATO's myDeductions app can help you log expenses throughout the year rather than scrambling at tax time.

Mixed-use devices: splitting personal and work

Most people use their phone, laptop, and internet connection for both work and personal purposes. The ATO requires you to apportion the work-related percentage and only claim that portion. For a mobile phone, review your bills for a representative four-week period and calculate the percentage of work calls, data, and messages versus personal use. If work use is 60%, you claim 60% of your phone bill. The same applies to internet — if you work from home three days per week and your household uses the internet every day, your work-related portion might be around 40-50% depending on usage. For a laptop or computer used partly for work, estimate the percentage of work use and claim that proportion of the purchase price or depreciation. The ATO does not accept a blanket 50/50 split without evidence. If you have a separate work phone or a dedicated work laptop provided by your employer, and you also use your personal devices for work, you can only claim the personal device costs to the extent they are for work purposes. Employer-provided equipment cannot be claimed at all since you did not incur the cost.

Common ATO audit triggers for WFH claims

The ATO uses data analytics to flag unusual claims, and work from home deductions are a focus area following the COVID-era spike in claims. Common triggers include claiming significantly more than others in your occupation or income bracket, claiming the fixed rate method for unrealistic hours (such as 2,500 hours per year when you work a standard 38-hour week), claiming running expenses on top of the 67c rate for items already covered by it, and failing to reduce claims for periods of annual leave, sick leave, or days spent in the office. Another red flag is claiming a dedicated home office (occupancy expenses like rent or mortgage interest) while also claiming the fixed rate method — you cannot do both. The ATO also cross-matches employer records, so if your employer reports you attended the office four days a week, a claim for five days of WFH expenses will be questioned. To stay safe, claim only what you are entitled to, keep thorough records, and use our Tax Calculator to model the impact of your deductions on your refund before lodging.