Working Out Your Work From Home Expenses This Tax Time
If you work from home, you may be able to claim work from home (WFH) expenses in your tax return. To qualify, you must genuinely work from home to perform your employment duties. Simply checking emails or taking occasional phone calls does not meet the requirement.
You must also incur additional running expenses because of your work from home arrangement. These expenses commonly include:
- Electricity for heating, cooling and lighting
- Home and mobile internet or data
- Phone expenses
- Stationery and office supplies
Choosing a Method to Calculate Your WFH Deduction
You can calculate your work from home deduction using either the fixed rate method or the actual cost method. Regardless of which method you choose, you must keep records that accurately track your work from home hours.
You can do this by:
- Keeping a diary or timesheets for a representative four‑week period showing your usual work pattern, or
- Recording your total work from home hours for the entire income year
You must also keep evidence of your additional expenses, such as receipts and bills, and be able to show the work‑related portion of those costs.
Fixed Rate Method
The fixed rate method offers a simpler way to calculate your deduction. For the 2024–2025 income year, the fixed rate is 70 cents per hour worked from home.
To calculate your claim, multiply your total work from home hours by 70 cents.
If you use the fixed rate method, you cannot claim separate deductions for expenses already included in the rate, such as stationery and office supplies.
Actual Cost Method
The actual cost method requires more detailed record‑keeping but allows you to claim the precise work‑related portion of your expenses.
Under this method, you must:
- Track your work from home hours, and
- Keep comprehensive records of all additional running costs incurred while working from home
You can only claim the portion of each expense that directly relates to your work.
What You Can’t Claim When Working From Home
Some expenses are not deductible, even if you work from home. These include:
- Items your employer normally provides at the office, such as tea, coffee or general household items
- Employer‑provided laptops or mobile phones
- Expenses your employer has reimbursed
Claiming Equipment and Furniture Separately
You can make separate claims for work‑related items not covered by the fixed rate or actual cost methods. These may include:
- Computers and other work‑related technology
- Office furniture such as chairs, desks and bookshelves
- Repairs and maintenance for work‑related equipment
Depreciating Assets and Immediate Deductions
If you use depreciating assets for both work and personal purposes and the item costs more than $300, you must calculate the work‑related portion and claim that percentage as a deduction for the decline in value over the asset’s effective life.
For items costing $300 or less, such as keyboards or computer mice, you can generally claim an immediate deduction in the year of purchase.
The Key Rule to Remember
To claim a work from home expense, the cost must directly relate to earning your income. If the expense does not have a clear connection to your work activities, it is not deductible.
Common WFH Claims That Don’t Pass the Test
Tax authorities regularly reject claims that lack a genuine work connection. Recent examples include:
- A mechanic attempting to claim household appliances, a television and gaming equipment
- A fashion industry manager claiming over $10,000 in luxury clothing and accessories to appear “well presented” at work events
These examples highlight the importance of ensuring every claim has a clear and direct link to your income‑earning activities.
Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
