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

Working from home has become a permanent feature of Australian working life. For the 2026-27 financial year, millions of Australians will claim work-from-home (WFH) deductions. Getting this right means a legitimate tax refund; getting it wrong means a rejected claim, a tax bill, or worse — an ATO audit.

The ATO has tightened WFH deduction rules significantly in recent years. The revised fixed rate method introduced in 2022-23 replaced the old shortcut (80c/hour), fixed rate (52c/hour), and the confusing hybrid approach. Understanding the current rules is essential.

The Two Methods for Claiming WFH Deductions

You can choose between the revised fixed rate method and the actual cost method. You don’t need to use the same method every year — you can switch between them depending on which gives you the better outcome. The key rule is that for any given financial year, you must use one method consistently.

Revised Fixed Rate Method: 67 Cents Per Hour

The revised fixed rate for 2026-27 is 67 cents per work hour. This rate covers:

• Energy expenses (electricity and gas used for heating, cooling, and lighting)
• Internet usage (home and mobile)
• Mobile and home phone usage
• Stationery and computer consumables (printer ink, paper)

The rate is per hour worked, not per hour you’re at home. If you spend 8 hours working from home in a day but also spend 8 hours at home sleeping and relaxing, you only claim 8 hours × 67c = $5.36 per day.

Example — typical hybrid worker: If you work from home 3 days per week, 48 weeks per year, for 8 hours per day: 3 × 48 × 8 = 1,152 hours. Deduction = 1,152 × $0.67 = $771.84.

What you can claim separately (on top of the 67c rate):

• Decline in value (depreciation) of office equipment: desks, chairs, monitors, computers, printers
• Repairs and maintenance of home office equipment
• Cleaning costs (only if you have a dedicated home office)

These items are not covered by the 67c rate and can be claimed separately. For equipment over $300, you must depreciate it over its effective life (typically 4 years for computers, 10+ years for office furniture). For items $300 or under, you can claim an immediate deduction in the year of purchase.

Record keeping for the fixed rate method: You must keep a record of every hour you work from home. A four-week representative diary is acceptable as evidence for a full year, but only if your working pattern doesn’t change significantly. The diary should show the days and hours worked. Records can be timesheets, rosters, a diary kept on your phone, or screenshots of your work login/logout times.

The ATO expects records created at the time — reconstructing a diary months later when you prepare your tax return is not acceptable and may result in your claim being disallowed.

Actual Cost Method

The actual cost method requires you to calculate and claim the actual work-related portion of each expense. This method takes more effort but can produce a higher deduction for people with significant WFH expenses.

Under this method, you claim:

• The work-related portion of electricity, gas, heating, and cooling costs
• The work-related portion of internet and phone bills
• The decline in value of home office furniture and equipment
• The work-related portion of computer consumables and stationery
• Repairs and maintenance of home office equipment
• Cleaning costs for your home office

For each expense, you need to calculate the work-related percentage and keep records supporting your calculation. For electricity and gas, this typically involves:

• Calculating the floor area of your home office as a percentage of your total home area, AND
• Multiplying by the percentage of time the space is used for work

If your home office is 10 square metres and your home is 100 square metres, and you use the office 40 hours per week for work out of 168 total hours: work percentage = (10/100) × (40/168) = approximately 2.4% of your electricity and gas bills.

For internet and phone: keep a four-week representative log of work vs personal usage, and apply that percentage to your annual bills.

What You CAN Claim

Phone and Internet

Whether using the fixed rate method (where internet and phone are covered by the 67c rate) or the actual cost method, you can claim the work-related portion. A representative four-week usage log is the standard evidence. For unlimited plans, you need to show that you use the service for work (not necessarily the exact data amount).

Office Equipment Depreciation

Standing desks ($400–$800), ergonomic chairs ($300–$600), monitors, keyboards, and computers can all be depreciated. Items costing $300 or less can be written off immediately. Items over $300 are depreciated over their effective life. For a typical laptop costing $2,000 with a four-year effective life, the annual depreciation is $500, with a pro-rata adjustment if you use it partly for personal purposes (say 80% work = $400 deduction).

Computer Consumables

Printer ink, toner, paper, and other supplies directly used for work are claimable. Under the fixed rate method, these are covered by the 67c rate. Under the actual cost method, claim the actual work-related cost.

Heating, Cooling, and Lighting

Under the fixed rate method, covered by the 67c rate. Under the actual cost method, you calculate the actual work-related portion using floor area and time as described above.

What You CANNOT Claim

Occupancy Expenses (Rent, Mortgage Interest, Council Rates)

The single biggest misconception about WFH deductions. Unless your home is a genuine “place of business” — meaning your employer doesn’t provide an alternative workplace and your home office is clearly identifiable as a business premise — you CANNOT claim rent, mortgage interest, council rates, or home insurance.

The ATO’s test is strict. If you’re an employee who chooses to work from home (even if your employer allows or encourages it), you are not running a business from home. Your home is where you live. The fact that you work there doesn’t change the nature of your housing costs.

Personal Consumables

Coffee, tea, milk, sugar, snacks, toilet paper, soap, tissues — these are personal expenses. No work-from-home arrangement changes that. The ATO has explicitly and repeatedly ruled these out.

General Household Cleaning

Unless you have a dedicated home office that requires separate cleaning, general household cleaning is a personal expense. If you have a dedicated office and pay for cleaning specifically of that area, you may be able to apportion it.

Children’s Education Costs

Your children’s school supplies, devices used for remote learning, or tutoring are not tax-deductible for you as an employee.

Home-to-Work Travel

This is never deductible for employees. The fact that your “office” is now in your home doesn’t create a deduction for travel. Even if you work from home 4 days and go to the office 1 day, the travel to and from the office on that one day is not deductible — it’s still ordinary home-to-work travel.

Record Keeping: The ATO’s Compliance Focus

WFH deductions are one of the ATO’s top compliance areas. In recent years, the ATO has:

• Disallowed millions of dollars in WFH claims where records were inadequate
• Sent “please explain” letters to taxpayers with unusually high WFH claims
• Used data analytics to identify claims that appear disproportionate to income

The golden rule: if you didn’t keep a record at the time, you can’t claim it. Reconstructing records after the fact is not acceptable.

Records you must keep:

• Hours worked from home (for the fixed rate method)
• Receipts, invoices, or bills for all actual cost claims
• Usage logs (four-week representative period for phone/internet)
• Depreciation schedules for equipment
• Floor plan or calculations for actual cost method

All records must be in English and kept for five years.

The ATO’s myDeductions app (part of the ATO app) is a free tool for recording deductions throughout the year. It lets you photograph receipts, log hours, and track expenses, then upload directly into your tax return or share with your tax agent.

Shared Spaces and Multiple People Working From Home

If you share your home with a partner, housemate, or family member who also works from home, you can each claim your own WFH deductions. However, you can’t both claim the same expense twice. For the actual cost method, divide the work-related portion of shared expenses appropriately. For the fixed rate method, each person claims their own hours — there’s no double-counting issue.

If you use a shared space (like the dining table) rather than a dedicated office, you can still claim WFH deductions using either method. The lack of a dedicated room doesn’t disqualify you. What matters is that you’re genuinely working and you keep proper records.

Employer Reimbursements

If your employer reimburses you for WFH expenses or provides an allowance, you generally cannot also claim those expenses as deductions. The expense has already been covered tax-free by your employer. If your employer pays you a WFH allowance that appears on your payment summary as taxable income, you can claim deductions to offset it.

Some employers provide equipment directly (laptops, monitors, chairs). If your employer provides the equipment, you can’t claim depreciation on it because you didn’t pay for it.

Use the Income Tax Calculator to see how your WFH deductions affect your refund. Visit /calculators/income-tax/ and enter your income and work-from-home expenses for a complete estimate.

Frequently Asked Questions

What is the fixed rate method for WFH deductions in 2026?

The revised fixed rate method allows you to claim 67 cents per hour worked from home for the 2026-27 financial year. This rate covers energy expenses (electricity and gas), internet usage, mobile and home phone usage, and stationery and computer consumables. You must keep a record of all hours worked from home — a representative four-week diary is acceptable if it reflects your typical working pattern throughout the year. You can also separately claim the decline in value of office equipment like desks, chairs, and computers, as well as repairs and maintenance of those items.

Can I claim rent or mortgage interest if I work from home?

Generally, no. Employees who work from home cannot claim occupancy expenses such as rent, mortgage interest, council rates, or home insurance premiums. The ATO’s position is that for most employees, your home is not a ‘place of business’ — it’s where you live, and working there doesn’t change the character of the expense. The exception is if you have a dedicated home office that is clearly identifiable as a place of business, and your employer doesn’t provide an alternative workplace — but this is a high bar.

What records do I need to keep for WFH deductions?

For the fixed rate method, you must keep a record of all hours worked from home for the entire financial year. A representative four-week diary can be used for a typical pattern, but you must also keep records showing that your pattern didn’t change significantly. For the actual cost method, keep receipts, invoices, and bills for all expenses, plus records showing how you calculated the work-related percentage. For phone and internet, a four-week representative log of work vs personal usage is acceptable. Records must be in English and kept for five years.

Can I claim coffee, tea, or toilet paper as WFH expenses?

No. The ATO explicitly excludes personal consumables like coffee, tea, milk, toilet paper, and other general household items. These are private expenses, not work-related, regardless of where you consume them. The same goes for general household cleaning products. Only items directly used for work (like printer ink, paper, or stationery) are claimable, and only the work-related portion.

Disclaimer: This article provides general estimates only and does not constitute financial, tax, or legal advice. Rates, thresholds, and rules change. Always refer to the ATO, your state revenue office, or a licensed professional for your specific circumstances. Last updated: July 2026.