Work From Home Tax Deductions: What You Can Claim in 2026

Working from home has become a permanent feature of Australian working life. The ATO has updated its rules to reflect this — but the revised method comes with stricter record-keeping requirements than many people realise.

Here's a clear breakdown of what you can claim and how.

The ATO offers two ways to calculate your working from home deduction:

This is the simplest approach for most people. You claim 70 cents for every hour you work from home, which covers:

• Electricity and gas (for heating, cooling, and lighting your workspace)
• Internet (the work-related portion)
• Phone (the work-related portion)
• Stationery and computer consumables

What it does not cover:

• Depreciation of office furniture and equipment
• Occupancy costs (rent, mortgage interest, rates) — these are generally only available to people running a business from home, not employees

You can claim depreciation of equipment separately on top of the fixed rate.

Records you need:

• A record of all hours worked from home for the entire income year — not just a sample period. This can be a timesheet, roster, diary, or log in your calendar.
• Evidence of the additional running expenses you incurred (e.g., electricity bills)

This method lets you claim the actual work-related portion of your home running expenses. It's more complex but can result in a higher deduction if your home office costs are significant.

You'll need to calculate the work-related percentage of each expense based on floor area and hours of use. This requires:

• Floor area of your dedicated workspace as a proportion of your home's total floor area
• Hours the space is used for work versus other purposes
• Actual bills for electricity, internet, phone, and other relevant expenses

This method suits people with a dedicated home office used exclusively for work.

The ATO is specific: you must be working from home to fulfil your employment duties — not just occasionally checking emails or taking calls. If your employer has a fixed office and you choose to work from home some days, you can still claim for those days.

You cannot claim if:

• You're completing minimal tasks (like checking emails) that don't require a dedicated workspace
• Your employer reimburses you for your home office costs

Regardless of which method you use, you can claim deductions for work-related equipment:

• Items costing $300 or less — claim the full cost in the year of purchase
• Items costing more than $300 — claim depreciation over the effective life of the asset

This includes computers, monitors, keyboards, webcams, headsets, and office furniture used for work.

If you use the item for both work and personal purposes, you can only claim the work-related percentage.

This is where many people come unstuck. Under the revised fixed rate method, you must keep a record of every hour worked from home across the full income year (1 July to 30 June). A four-week sample is no longer sufficient.

Practically, this means:

• Keeping a diary or spreadsheet of your WFH hours
• Noting start and finish times, or total hours per day
• Keeping this record from the start of the financial year — you can't reconstruct it at tax time

If you haven't been keeping records, start now for the 2025–26 income year. Even a partial year's records are better than none.

Many people assume they can claim a portion of their rent or mortgage interest as a home office expense. For employees, this is generally not the case — occupancy costs are only deductible if your home is your principal place of business (i.e., you run a business from home and have no other fixed office).

Claiming occupancy costs incorrectly can also trigger capital gains tax implications when you sell your home.

Working from home deductions are one of the most scrutinised areas in individual tax returns. The ATO uses data matching to identify claims that look out of proportion with income or industry norms.

The safest approach is to keep accurate records throughout the year and have a registered tax agent review your return before lodgement.

Golden Mane Advisory prepares individual tax returns for clients across Perth and Australia. If you want to make sure you're claiming everything you're entitled to — without the risk of an ATO audit — get in touch with our team.