Changes to Working From Home Tax Deductions

Updated ATO Rules for Work From Home Deductions in Australia

What's the latest update on claiming working from home expenses? 

The Australian Taxation Office (ATO) have changed the way that taxpayers claim deductions for costs incurred when working from home. 

If you work from home, it’s important you read on as it will affect how the deduction is calculated on your next tax return.
 

Revised Fixed Rate Method for Work From Home Expenses 

The revised fixed rate method applies from 1 July 2022 onwards. The amount of the fixed rate for the 2025 year is $0.70 cents per hour.  

Expenses Covered Under the 70 Cents Fixed Rate Method

The revised fixed rate of $0.70 cents per work hour covers:

• Energy expenses (electricity and gas)
• Phone usage (mobile and home)
• Internet
• Stationery and computer consumables

No additional deduction for any expenses covered by the rate can be claimed if you use this method. 

Note that phone usage and internet expenses are included in the fixed rate method. Under the new rules, if you use your mobile phone for work purposes when you are out-and-about, as well as at home, you can no longer claim a separate deduction for this use and still use the fixed rate method. If you wish to claim actual use of your mobile phone (or home internet), you must claim using the actual method for all working from home expenses (see below).

Additional Expenses Claimable Separately Under the Fixed Rate Method

• The decline in value of assets used while working from home, such as computers and office furniture.
• The repairs and maintenance of these assets.
• The costs associated with cleaning a dedicated home office. 

Home Office Requirement Under the Revised Fixed Rate Method

The revised fixed rate method doesn’t require that you have a dedicated home office space to claim working from home expenses. So, if you work from the kitchen or living room, you can still claim a deduction.

Record Keeping Requirements for Work From Home Expenses

You need to keep a record of all the hours worked from home for the entire income year. 

The ATO won’t accept estimates, such as  a 4-week representative diary or similar document. 

Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, or a dairy for the full year. 

Records must be kept for each expense that you have incurred which is covered by the fixed rate per hour (for example, if you use your phone and electricity when working from home, you must keep one bill for each of these expenses).
 

Actual Cost Method for Claiming Work From Home Expenses 

You can claim the actual work-related portion of all running expenses. To claim this method, you must have an area set aside as a dedicated home office.

Compliance obligations include keeping detailed records for all the working from home expenses being claimed, including: 

• All receipts, bills and other similar documents to show you have incurred the expenses and a record of the number of hours worked from home during the income year (either the actual hours or a diary or similar document kept for a representative 4-week period to show the usual pattern of working at home). 
• A record of how you have calculated the work-related and private portion of the expenses. 

If you are claiming your working from home expenses, you can’t claim a deduction for expenses which have already been reimbursed by your employer.

We understand that many of you will have further questions about these changes and how they may affect your tax return and record keeping requirements. We have trained all our H&R Block Tax Experts on the rules. Find an office near you and book an appointment online today or call us on 13 23 25.