How to Claim Working-from-Home Expenses on Your Tax Return

What Changed from 1 July 2026

From the 2026-27 income year, a new $1,000 standard work-related deduction applies. This is an optional flat deduction for eligible employees who incur work-related expenses. It is designed to simplify returns for people with straightforward work-from-home arrangements.

However, the standard deduction does not apply to the 2025-26 tax return you are lodging now. For the current income year, you must still claim work-from-home expenses using either the fixed rate method or the actual cost method, and you must meet the record-keeping requirements for whichever method you choose.

Step 1: Confirm You Incurred Additional Expenses

To claim any work-from-home deduction, you must have incurred additional expenses as a direct result of working from home. Checking a few work emails from home on the weekend does not qualify. The ATO looks for a genuine pattern of working from home that created extra costs you would not have paid if you worked entirely at your employer's premises.

Acceptable work-from-home scenarios include:

• Your employer required you to work from home full-time or for a defined number of hours each week.
• You had a dedicated home office or workspace that you used exclusively for work.
• You paid additional electricity, gas, internet, phone, or stationery costs because of your remote work.

If you split your time between home and the office, you can still claim, but your deduction must be apportioned to reflect only the hours you actually worked from home.

Step 2: Choose the Fixed Rate Method or Actual Cost Method

The ATO offers two methods for calculating work-from-home deductions. You must choose one and apply it consistently across all eligible expenses for the year.

Fixed rate method: You claim a flat rate of 70 cents per hour worked from home. This rate covers additional electricity and gas expenses, internet and data expenses, mobile and home phone expenses, and stationery and computer consumables. You cannot claim these items separately if you use the fixed rate method.

Under the fixed rate method, you must keep a record of the total number of hours you worked from home during the entire income year. A timesheet, roster, diary, or spreadsheet is acceptable. An estimate of your hours is not acceptable to the ATO.

Actual cost method: You claim the actual work-related portion of your running expenses. This method requires you to calculate a reasonable apportionment for electricity, gas, internet, phone, and any other expenses you incurred because of working from home.

The actual cost method can produce a higher deduction if you have significant home office expenses, such as a dedicated room with heating and cooling, a high-speed internet plan, or expensive office equipment. However, it requires far more detailed record keeping. You must have a diary or similar record of the hours and days you worked from home, all receipts and bills, and documentation showing exactly how you calculated the work-related split.

Step 3: Calculate Your Deduction

If you use the fixed rate method, multiply your total hours worked from home by 70 cents. For example, if you worked from home 800 hours during the year, your deduction is 800 times 70 cents, which equals $560.

If you use the actual cost method, add up your work-related expenses and apportion them. A common approach is to calculate the percentage of your home used for work, based on floor area, and apply that percentage to occupancy expenses such as electricity, gas, and home insurance. For internet and phone bills, apportion based on work versus personal usage. Keep a log of your work hours and a record of how you calculated each apportionment.

You can also claim the decline in value of home office equipment such as a desk, chair, monitor, or printer, provided you use them for work. Items costing more than $300 are claimed over their effective life. Items costing $300 or less can be claimed immediately.

Step 4: Keep Your Records for Five Years

The ATO requires you to keep records for five years from the date you lodge your tax return. For work-from-home claims, this means:

• A record of total hours worked from home, with dates.
• Receipts or invoices for any expenses you claim.
• A record of how you calculated any apportionment if you used the actual cost method.
• One record for each type of expense covered by the fixed rate, such as a quarterly electricity bill and one receipt for stationery.

If the ATO reviews your return, you must be able to produce these documents on request. Digital records are acceptable as long as they are clear and legible.

Step 5: Enter Your Deduction in myTax

When you lodge your return through myTax, select "Personalise return" and confirm that you had work-related expenses. In the deductions section, select "Other work-related expenses." Choose "Working from home expenses" and enter the total amount you are claiming.

In the description field, include the method you used to calculate the deduction, either "Fixed rate" or "Actual cost." If you used the actual cost method, attach a brief explanation of your apportionment calculation to your myTax record. The ATO does not require you to upload receipts during lodgement, but you must have them available if asked.

Common Mistakes to Avoid

Claiming private expenses such as groceries, household cleaning, or general internet use without apportioning for work is the most common error. The ATO's data-matching systems flag returns with unusually high work-from-home deductions relative to reported income, and the agency has publicly warned that it is reviewing these claims more closely in 2026.

Another mistake is forgetting that home-to-work travel is not deductible. Travel between your home and your regular workplace is considered private travel, even if you work from home some days. Travel between two workplaces, or between your home and a secondary workplace, is usually deductible.

Do not treat the new $1,000 standard work-related deduction, which applies from 2026-27, as a $1,000 refund. It is a deduction, not a payment. Its value is your marginal tax rate, roughly $300 for most taxpayers. It replaces your ordinary work claims up to $1,000, so you cannot claim both the standard deduction and itemised expenses for the same income year.