A complete guide to claiming working from home expenses on your Australian tax return in 2026, covering the fixed rate method, actual costs and what the ATO allows.
The Guides Desk is a contributing writer covering guides and public affairs for The Sydney Times.
NSW workers who spent months logging hours at their kitchen tables and spare bedrooms can now claim a tax deduction for those working from home expenses. The Australian Tax Office allows employees to offset a portion of their home office costs, but the rules differ depending on which method you choose and what you actually incurred during the 2025-26 financial year.
You are eligible to claim a deduction if you worked from home as part of your employment duties and your employer did not reimburse you for those costs. This applies to NSW residents across Sydney, the Central Coast, the Hunter Valley and regional centres alike. The deduction covers the additional expenses you incurred while performing your job at home, not the general costs of living.
The Australian Tax Office requires you to have records of your working hours. A diary, timesheet or logbook covering a representative period satisfies this requirement. From 1 July 2022, the ATO accepts a shortcut method of 67 cents per hour, but you can also choose the fixed rate method or the actual cost method depending on which yields the larger refund.
Under the fixed rate method, you claim 67 cents per hour for every hour you worked from home. This rate covers electricity, gas, internet, phone usage and the depreciation of furniture and furnishings. You cannot claim a separate deduction for any of those items if you use this method.
To use the fixed rate method, you must keep a record of the hours you worked from home. The ATO accepts a four-week representative diary as evidence. You then multiply those hours by 67 cents and include the total in your tax return. This method suits people who want a straightforward calculation without tracking individual bills.
The actual cost method lets you claim the precise expenses related to working from home. You calculate the work-related portion of each bill, including electricity, gas, internet, phone, cleaning and depreciation of assets such as desks and chairs.
This method requires more meticulous record-keeping. You need receipts for every expense and a reasonable basis for calculating the work-related percentage. For example, if your home office occupies 15 percent of your total floor area, you might claim 15 percent of your electricity bill. The Australian Tax Office scrutinises these claims carefully, so accurate documentation is essential.
Deductible items include the work-related portion of electricity and gas bills, internet and phone costs, computer consumables such as printer ink and paper, and the decline in value of office equipment. You can also claim the cost of cleaning your home office if it is exclusively used for work purposes.
You cannot claim deductions for items your employer provided or reimbursed. General household expenses such as rent, mortgage repayments and groceries are not deductible, even if you worked from home while living in the property. The ATO draws a firm line between the costs of running a household and the costs of earning an income.
The myTax platform guides you through each step, but having your records organised before you start saves significant time. The Australian Tax Office publishes detailed guidance on its website at ato.gov.au for workers who need clarification on any aspect of the claim process.
Claiming expenses your employer reimbursed is the most frequent error. The ATO cross-references employer reports, and discrepancies trigger audits. Another common mistake is claiming the entire phone or internet bill without separating the private usage portion. Only the work-related share qualifies for a deduction.
Failing to keep adequate records also undermines your claim. The ATO requires written evidence for any deduction over $300. A simple diary noting the dates and hours you worked from home, combined with copies of your bills, provides sufficient documentation for most claims.
NSW workers in Sydney and regional areas face the same federal tax rules, but the cost of living and housing patterns affect how much you can reasonably claim. Workers in apartments in the CBD may have smaller dedicated office spaces than those in houses in the outer suburbs, which influences the actual cost calculation. The fixed rate method removes this variability and provides a consistent deduction regardless of your living situation.
For more information on Australian tax obligations and the latest ATO updates, visit Australian Tax Office. You can also access your tax return directly through myTax. Additional guidance on work-related expense claims is available at ATO deductions.
The working from home tax deduction remains one of the most accessible claims available to NSW employees. Whether you choose the fixed rate method for simplicity or the actual cost method for a potentially larger refund, keeping accurate records and understanding the rules ensures you claim everything you are entitled to without inviting scrutiny from the Australian Tax Office.
Direct inquiries, corrections, or documentation concerning this dispatch to our editorial newsroom desk.
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