How to Claim a Tax Deduction for Home Office in Australia 2026
๐ Quick Summary — Home Office Deduction 2025–26
| Fixed rate (2025–26) | 70 cents per hour worked from home |
| Record keeping required | Diary or log of actual hours — no more four-week representative period |
| What's included in 70c rate | Internet, electricity, phone — cannot claim these separately |
| What's NOT included | Desk, chair, monitor, laptop — claim separately if over $300 |
| Alternative method | Actual cost method — more complex, may give higher deduction |
| Where to enter in myTax | Deductions → Other work-related expenses |
When I first started working from home two days a week while running my Queensland business, I had no idea the 70-cent fixed rate even existed. For two years I'd been manually tallying electricity bills and trying to calculate a rough percentage — the hard way — before my accountant pointed me to the ATO's fixed rate method. The maths was simple once I knew about it. The frustrating part was realising how much simpler it could have been from day one.
If you've been working from home — whether full-time, hybrid, or just occasionally — here's exactly how to claim what you're entitled to for the 2025–26 year, and what records you actually need to keep.
1. The 70-Cent Fixed Rate — How It Works
The ATO's revised fixed rate method allows you to claim 70 cents for each hour you genuinely worked from home during the income year. It's the simplest approach for most employees and covers a broad range of running expenses in one calculation.
The 70-cent rate covers:
- Electricity and gas used while working from home
- Internet expenses (the work-related portion)
- Phone expenses (the work-related portion)
- Stationery and computer consumables
Important: If you use the fixed rate, you cannot also claim electricity, internet, or phone separately. These are already built into the 70 cents. The only things you can claim on top of the fixed rate are the decline in value of furniture and equipment (like a desk, chair, or monitor) and the cost of equipment repairs.
2. What Records You Actually Need
This changed significantly from 1 July 2022. The ATO no longer accepts a representative four-week diary — you now need records covering the entire income year.
- A continuous record of hours worked from home — a diary, timesheet, employer records, or a log in your phone
- At least one document showing you incurred each of the expenses covered by the rate (e.g., a phone bill, electricity bill, internet invoice)
I use a simple note in my phone that I update at the end of each week. Takes about 30 seconds — just "WFH: Mon, Wed, Thu = 24 hrs." At tax time I add them up. That's it. You don't need a complex spreadsheet, just something that shows the ATO you tracked it properly throughout the year.
3. Calculating Your Deduction
Fixed Rate Calculation
To work out your hours, add up the actual hours you worked from home across the full year — not just the days, but the hours within each day. If you worked 7.5 hours on a home day, count 7.5, not 8.
4. The Actual Cost Method — When It's Worth It
The actual cost method lets you claim the real additional expenses incurred because you worked from home. It's more work but can produce a larger deduction — particularly if you have a dedicated home office, high electricity costs, or expensive equipment.
What you can claim under actual cost
- Electricity: Calculate the cost per hour for heating, cooling, and lighting your work area, multiplied by hours worked
- Internet: Work-related percentage of your actual internet bill
- Phone: Work-related percentage based on a four-week representative period
- Decline in value: Desk, chair, monitor, and other dedicated work equipment
- Cleaning: If you have a dedicated home office, a proportionate cost of cleaning
- Occupancy (rare): Rent or mortgage interest — only if your home is a genuine place of business, which excludes most employees
Who should consider the actual cost method? If you have a dedicated room used exclusively for work, pay high electricity rates, and have strong records, compare both methods before lodging. For most hybrid workers with no dedicated office, the fixed rate is simpler and often comparable.
5. Fixed Rate vs Actual Cost — Side by Side
| Factor | Fixed Rate (70c) | Actual Cost Method |
|---|---|---|
| Calculation | Hours × $0.70 | Add up each actual expense |
| Records needed | Hours log + one bill per covered expense | All bills, receipts, usage calculations |
| Dedicated office required? | No | No (but needed for occupancy expenses) |
| Can claim internet separately? | No — included in rate | Yes |
| Can claim equipment separately? | Yes | Yes |
| Best suited for | Most hybrid and remote employees | Dedicated home office, high expenses |
6. Claiming Equipment Separately
Regardless of which method you use, you can claim the work-related portion of equipment decline in value separately. The rules depend on the item's cost:
- Under $300: Claim the full work-related cost immediately in the year of purchase
- $300 or more: Claim over the item's effective life using the ATO's decline in value rules
- Shared use: Only the work-related percentage is deductible — if you use a laptop 60% for work, claim 60%
When I bought a $480 monitor specifically for my home office setup, I claimed it over its effective life of 5 years — around $96 per year at 100% work use. If you're buying equipment that's genuinely for work, keep the receipt and note the date and purpose. It adds up over time.
7. Common Mistakes to Avoid
- Claiming electricity or internet separately while also using the 70-cent fixed rate
- Claiming an expense reimbursed by your employer
- Claiming 100% of an item that's also used privately
- Estimating hours without maintaining records throughout the year
- Claiming the purchase price of equipment over $300 all in one year
- Claiming rent or mortgage interest as an employee without a genuine place of business
- Including household expenses that didn't actually increase because of working from home
- Discarding receipts and records after lodging your return — keep them for at least five years
8. How to Enter the Deduction in myTax
When preparing your tax return through myGov and myTax, home office expenses are entered under Other work-related expenses:
- Sign in to myGov and open the linked ATO service
- Start or resume your 2026 income tax return
- Open the Deductions section
- Select Other work-related expenses
- Enter your calculated home office deduction amount
- Add a description — e.g., "Home office fixed rate — 1,152 hours × $0.70"
- Keep your supporting records after lodging in case of ATO review
Do not attach receipts when lodging online unless the ATO specifically requests them. You must, however, retain all records for at least five years from the date you lodge.
9. Frequently Asked Questions
What is the working-from-home rate for 2025–26?
The fixed rate is 70 cents for each eligible hour worked from home during the 2025–26 income year (1 July 2025 – 30 June 2026). This rate was set by the ATO and covers electricity, internet, and phone costs — you cannot claim these separately if using this rate.
Do I need a separate home office to claim?
No — you can claim running expenses (electricity, internet) while working at a kitchen table or shared space under both methods. A dedicated room is only required if you want to claim occupancy expenses (rent or mortgage interest), which is generally only available to people who run a genuine business from home, not employees.
Can I claim my internet bill separately?
Not if you use the fixed rate for the same period — internet is already included in the 70-cent rate. Internet can be calculated and claimed separately only if you use the actual cost method.
Can I claim a laptop or monitor?
Yes — equipment like laptops, monitors, and keyboards can be claimed separately regardless of which method you use. Items under $300 can be claimed in full in the year of purchase (work-use percentage only). Items $300 or more are depreciated over their effective life. Keep your purchase receipt and note the work-use percentage.
Can I claim an office chair or desk?
Yes — furniture used for work is deductible at the work-related percentage. A $200 office chair used 80% for work = $160 deductible immediately. A $700 standing desk used 90% for work is depreciated over its effective life at 90%. Again, keep the receipt.
Which method gives a bigger deduction?
It depends on your situation. For most employees working 2–3 days from home with no dedicated office, the 70-cent fixed rate and the actual cost method produce similar results. The actual cost method may be significantly better if you have a dedicated room, pay high electricity rates, or have expensive home office equipment. Run both calculations before lodging if you're unsure.
The easiest time to prepare a home office deduction is not at the end of June — it's throughout the year. A quick weekly note of your hours and a folder for equipment receipts takes five minutes a month and saves hours of guesswork at tax time.
Sources: ATO — Working from home expenses, ATO — Fixed rate method
Disclaimer: This article provides general information only and does not constitute financial, legal or personal tax advice. ATO rules and individual circumstances can change. Always check current guidance from the Australian Taxation Office or speak with a registered tax agent before lodging your return.
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