Last updated 1 October 2026
If you work from home, you can generally claim the extra running costs it creates: energy, internet and data, phone, stationery and consumables, plus the decline in value of your desk, chair and computer. The Australian Taxation Office (ATO) allows two ways of calculating that claim: a fixed rate per hour and an actual cost calculation. Which one gives the better result depends on your bills, your hours at home, and the records you kept.
In this article, we explain how each method works, what the ATO expects you to keep, and where the rules change for employees, sole traders and business owners. Griffiths Advisory has prepared returns for West Australians since 1987, and our tax accountants in Perth work through it with clients every year.
Key Points
- Two methods are available, fixed rate and actual cost, and one is chosen for each income year.
- The fixed rate method needs no dedicated home office. A cleaning claim under the actual cost method does.
- The fixed rate covers energy, internet, phone and consumables in one figure, so those cannot also be claimed separately.
- Employees generally cannot claim rent, mortgage interest or rates, and claiming occupancy expenses can reduce the capital gains tax exemption on your home.
Which Method to Use for Your Working From Home Claim
This article is general information and does not take account of your circumstances. Rates and thresholds change every financial year, so check the figures below against current ATO guidance before you lodge.
The fixed rate for the 2024–25 and 2025–26 financial years is 70 cents per hour worked at home. The actual cost method has no rate. It works out the work-related portion of what you genuinely paid.
| Comparison | Fixed Rate Method | Actual Cost Method |
|---|---|---|
| Basis of the claim | 70 cents per hour worked from home | The work-related portion of each actual bill |
| Dedicated home office | Not required | Required for a cleaning claim |
| Records needed | Hours across the year, plus one record for each covered expense | Hours across the year, plus every bill and receipt |
| Claimed separately | Office furniture and technology, and their decline in value | Nothing further, the calculation already includes them |
| Generally suits | Modest bills, no dedicated room, straightforward hours | High bills, a dedicated room, long hours at home |
The method is chosen when the return is prepared, so a bigger house, a changed working pattern or a jump in your energy bill can each change the answer in a later year.
What the Fixed Rate Method Covers
The fixed-rate method rolls several running costs into one hourly figure. For the 2024–25 and 2025–26 financial years, 70 cents per work hour covers home and mobile internet or data, mobile and home phone usage, electricity and gas for heating, cooling and lighting, and stationery and computer consumables such as printer ink and paper.
Office furniture and technology sit outside that rate. An item costing $300 or less used mainly to earn non-business income can generally be deducted immediately, and a dearer item is claimed through its decline in value.
Importantly, the covered costs cannot be claimed twice. Anyone used to claiming a large mobile or internet bill separately loses that claim the moment the fixed rate is applied. That point alone decides the method for households with high data costs.
What the Actual Cost Method Covers
The actual cost method works out the work-related portion of each expense you incurred. It can include the decline in value of home office furniture, energy for heating, cooling and lighting, phone, data and internet, stationery and consumables, and cleaning a dedicated home office.
Where an expense serves both private and work purposes, the ATO requires the deduction to be apportioned “on a fair and reasonable basis”. A laptop used 80 per cent for work is claimed at 80 per cent. It takes longer to prepare and, for a household with a dedicated room and high bills, often produces a larger deduction.
Records the ATO Expects You to Keep
Record keeping is where most home office claims are won or lost, and the hours record has to cover the whole income year. A four-week sample is no longer accepted.
| Record | What It Needs to Show | How Long to Keep It |
|---|---|---|
| Hours record | Actual hours worked at home across the entire income year, by timesheet, roster, diary or spreadsheet | Five years from lodgement |
| Expense records | At least one bill or receipt for each running expense claimed | Five years from lodgement |
| Asset records | Purchase date, cost and work-related percentage for furniture and technology | Five years from lodgement |
| Apportionment working | How you arrived at the work-related percentage under the actual cost method | Five years from lodgement |
A shared spreadsheet or a daily calendar entry is enough, provided it is made as you go rather than reconstructed in July.
How Employees, Sole Traders & Business Owners Are Treated Differently
The running expense rules are broadly the same across the three groups. What changes is the treatment of the house itself.
| Your Situation | Running Expenses | Occupancy Expenses |
|---|---|---|
| Employee working from home | Claimable under either method | Generally not claimable |
| Sole trader running the business from home | Claimable under either method | Possible where the home qualifies as a place of business, with capital gains tax consequences |
| Company or trust operating from a director’s home | Depends on the arrangement between the entity and the occupant | Depends on the arrangement, and should be reviewed before it is claimed |
Where a business runs from home rather than simply spilling into it, the structure question sits alongside the deduction question. A Perth trade business quoting and invoicing at the kitchen table is the common case, and those hours are routinely left out. Our posts on setting up a home business and tax deductions for tradies cover each side.
Read more: Common Tax Deductions for Small Business Owners
Occupancy Expenses & the Capital Gains Tax Exemption on Your Home
This is the part of the home office rules that costs people the most, and it rarely surfaces until the house is sold.
Occupancy expenses are rent, mortgage interest, rates, land tax and house insurance. The ATO states that as an employee working from home, generally “you can’t claim occupancy expenses”. They become claimable only where the home passes the place of business test, which has three conditions:
- The nature of your income-earning activities requires a place of business
- Your employer does not provide an alternative place of business
- The work area is used exclusively or almost exclusively for work and is not readily capable of any other use
Passing that test carries a consequence. Where you become eligible to claim occupancy expenses after buying your home, and you are eligible to deduct interest, you lose the full main residence exemption on the eventual sale. The ATO recommends getting a market valuation when the home first starts producing income, and that valuation is much harder to obtain years later.
At Griffiths Advisory, this is the question clients ask most once a business moves into the spare room, because it sits across income tax and capital gains tax at once. Our property tax accountants in Perth look at it alongside the rest of a client’s property position.
Working From Home Deductions in Perth & Western Australia
Two local factors change the arithmetic for a Perth household.
The first is energy. Most Perth homes buy electricity from Synergy on the Home Plan A1 tariff, which covers the South West Interconnected System across Kalbarri, Perth, Albany and Kalgoorlie. Those rates are revised periodically, so an actual cost calculation that was right one year can be wrong the next.
The second is the weather. Perth summers push cooling costs into the December to March quarters and leave the winter quarters comparatively light. Averaging one bill across twelve months understates a run of forty degree days, so keep all four quarterly bills.
Mistakes That Reduce a Working From Home Claim
The same ordinary record keeping failures come up every year:
- Claiming personal items such as household supplies, tea and coffee
- Keeping no daily log of hours worked at home
- Claiming rent or mortgage interest as an employee
- Using an estimate in place of a documented calculation
- Claiming phone and internet separately after applying the fixed rate
- Discarding bills and receipts before the five-year retention period is up
Talk to a Perth Accountant About Your Home Office Claim
At Griffiths Advisory, we look at how you actually work before we look at a method: your hours, your bills, the setup of the room, and where a home office claim meets the rest of your position. We will tell you which method gives the better legitimate result, and what to start recording now so next year’s claim is easier to substantiate.
Phil Griffiths has run Griffiths Advisory from Wembley since 1987, and our tax accountants in Perth work with employees, sole traders, trade businesses and property investors across greater Perth.
Book a chat with Phil and bring last year’s return with you.
Frequently Asked Questions
How do I calculate my working from home deduction?
Multiply your hours worked at home across the income year by the fixed rate for that year, or work out the work-related portion of each actual expense you paid. Both start with an accurate record of hours. Run both before deciding, because the gap varies a lot by household.
Do I need a separate room to claim working from home expenses?
Not for the fixed rate method, which the ATO applies without any dedicated home office requirement. A cleaning claim under the actual cost method does, and occupancy expenses need a work area used exclusively or almost exclusively for work.
Can I claim my rent or mortgage if I work from home?
Generally no, if you are an employee. Rent, mortgage interest, rates and house insurance are occupancy expenses, claimable only where your home passes the place of business test. Claiming them also affects the capital gains tax position on your home, so take advice first.
Are accountant fees tax deductible in Australia?
The cost of managing your tax affairs, including a registered tax agent’s fee for preparing and lodging your return, is generally deductible in the year you pay it. Our price guide sets out our fee ranges, which vary with the complexity of the work.
What records does the ATO want for a home office claim?
A record of actual hours worked at home covering the entire income year, plus evidence of the expenses claimed. Under the fixed rate method, that means at least one bill for each running expense the rate covers. Under the actual cost method, it means every bill and receipt, plus your apportionment workings. Keep it all for five years.
This article is general information only. It does not take account of your objectives, financial situation or needs, and it is not a substitute for advice about your circumstances. Rates, thresholds and rules change each financial year. Please confirm current ATO guidance and speak with a registered tax agent before acting.
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Phil has been the Managing Director of Griffiths Advisory for 29 years, combining his expertise in taxation, business advisory, superannuation, negative gearing, and wealth creation. He also loves an active lifestyle, indulging in surfing, cycling, snowboarding, and spending quality time with his wife and two children.
