Working from home, even part of the week, opens up a category of deductions many people either miss entirely or claim incorrectly. However, the ATO has specific methods for calculating this claim, and using the right one with the right records makes a genuine difference to your return.
You need to be working from home to fulfil your employment duties, not just occasionally checking emails from the couch, and you need to be incurring additional running costs as a result. Consequently, a genuine, regular working-from-home arrangement is the starting point before any deduction method applies.
The fixed rate method. This applies a set rate per hour worked from home, covering costs like electricity, internet, phone, and stationery, and requires you to keep a record of the actual hours worked from home throughout the year not an estimate.
The actual cost method. This involves calculating the actual work-related portion of your running costs individually, which requires more detailed record-keeping but can result in a larger claim for some people, particularly those with higher home office costs.
Therefore, which method suits you best depends on your specific circumstances, and it’s worth comparing both rather than defaulting to whichever seems simplest.
A record of hours worked from home. This needs to be an ongoing record such as a timesheet, roster, or diary rather than a rough estimate calculated at tax time.
Evidence of expenses incurred. At least one bill for each expense type (electricity, phone, internet) to show you actually incurred the cost, even under the fixed rate method.
Details for the actual cost method. If using this method, you’ll need more detailed records, including the percentage of home floor space used for work and itemised running costs.
Occupancy expenses. Rent, mortgage interest, and council rates generally aren’t claimable unless you run a business from home and a genuine “place of business” exists there a higher bar than most employees meet.
General household items. Costs that would be incurred regardless of whether you worked from home, like household cleaning beyond what’s work-related, generally aren’t deductible.
Items like a laptop, monitor, or office chair used for work can often be claimed separately from your running costs either as an immediate deduction if under a certain value or depreciated over time if the cost is higher.
Working from home claims are an area the ATO reviews closely, particularly where hours or expense estimates seem inflated or inconsistent with the person’s actual work pattern. Therefore, accurate, ongoing records are your best protection if a claim is ever queried.
EBATS helps you choose the right method, keep the right records, and claim your working-from-home expenses accurately and confidently.
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