Working from the kitchen bench twice a week, answering emails from a spare room or working full-time from a dedicated study can all create costs. However, the ability to claim remote work expenses depends on what you paid, how you worked, whether your employer reimbursed you and the records you kept. The goal is not to claim everything connected with being at home. It is to claim the work-related portion you are genuinely entitled to.
For Australian employees, home office deductions are an area where small recordkeeping gaps can make a meaningful difference. A clear approach helps you reduce stress at tax time while keeping your return accurate and defensible.
When can you claim remote work expenses?
A work-from-home expense may be deductible where you incurred it yourself, it directly relates to earning your employment income and you have not been reimbursed by your employer. You also need evidence to support the claim.
The distinction between a personal cost and a work cost matters. Your usual household internet plan, electricity bill or mobile plan does not become fully deductible because you sometimes work at home. Only the work-related component may be claimed, using a method that reasonably reflects your circumstances.
Expenses are also not deductible merely because working from home is convenient. If you choose to work from home when your employer provides a suitable workplace, you may still be able to claim eligible running expenses for the hours worked at home. But you cannot claim costs your employer paid or reimbursed, even if you initially paid the bill yourself.
Employees generally cannot claim occupancy costs such as rent, mortgage interest, rates or home insurance simply because they work remotely. These are normally private household costs. Different considerations can apply to people genuinely operating a business from home, particularly where part of the property is used exclusively as a place of business. That area needs tailored advice, as it can have capital gains tax implications when the property is sold.
Two ways to claim remote work expenses
The ATO allows employees to calculate eligible home office running expenses using either the fixed rate method or the actual cost method. Neither is automatically better. The appropriate choice depends on your work pattern, the expenses you incur and the quality of your records.
The fixed rate method
The fixed rate method applies an ATO-set hourly rate to the actual hours you worked from home during the income year. The rate is reviewed from time to time, so it is sensible to confirm the rate that applies to the year you are lodging for.
This method is designed to cover the work-related portion of electricity and gas for heating, cooling and lighting; internet and mobile or home phone usage; stationery; and computer consumables such as printer ink. You cannot make separate claims for those same items if you use the fixed rate method.
You may still be able to claim certain expenses separately, including the decline in value of work-related assets such as a desk, office chair, monitor or laptop. Repairs to eligible assets may also be claimable in the right circumstances. The important point is to avoid claiming the same expense twice.
The fixed rate method can be practical for people with regular remote work hours and ordinary household costs. It does not remove the need for records. You need to keep a record of the actual hours you worked from home across the full income year, such as a timesheet, roster, diary or calendar record. You should also retain evidence for the relevant expenses, including bills or invoices.
The actual cost method
The actual cost method involves calculating the work-related share of each expense you claim. It can be worthwhile where your eligible costs are high or your work arrangements are unusual, but it requires more detailed calculations and supporting evidence.
For example, you might calculate the work portion of your internet by comparing work use with private use over a representative period. Electricity claims may require an assessment of the energy used by work equipment and the cost of running heating, cooling and lighting while you work. If you claim the decline in value of equipment, you need purchase records and a reasonable basis for separating work and private use.
This method suits taxpayers who are comfortable maintaining detailed records, or who have substantial work-related costs not well represented by the fixed rate. It is not a licence to estimate. The calculation needs to be reasonable and supported by documentation.
Records that make your claim easier to support
The strongest deductions are usually the ones supported by simple, consistent records. Waiting until June to recreate a year of work-from-home hours from memory is difficult, and it can lead to a claim that is either too high or lower than it should be.
Keep your work-from-home hours as you go. A digital calendar, timesheet or diary can work well, provided it clearly shows the days and hours you worked from home. Retain electricity, gas, internet and phone bills, as well as receipts for equipment, stationery and repairs. If an expense has both private and work use, make a brief note explaining how you determined the work percentage.
For depreciating assets, retain the receipt, purchase date, cost and your estimate of work use. A $900 monitor used 80 per cent for work is treated differently from a monitor used equally for streaming, gaming and work. The deduction should reflect the work-related use, not the fact that the item sits in your home office.
If your employer provides an allowance, keep the relevant payslips and understand what it covers. An allowance may be assessable income, but that does not mean you can automatically claim an equivalent deduction. Your claim must still be based on the expenses you actually incurred and can substantiate.
Common mistakes to avoid
One frequent mistake is claiming a flat weekly amount without records. Tax deductions need a basis. Another is using the fixed rate method and then adding separate phone, internet, stationery or energy claims that are already included in that rate.
It is also common to claim the full purchase price of a laptop, chair or desk in one year. Depending on the cost and the nature of the item, the deduction may need to be spread over its effective life as a decline in value deduction. Low-cost asset rules may be available in some circumstances, but they should be applied carefully.
Be cautious with costs that feel work-related but remain private. Coffee, lunch and snacks consumed at home are ordinarily private expenses. Everyday clothing is generally private too, even if you wear it during video meetings. Costs of travelling from home to your normal workplace are usually not deductible simply because you performed some work at home before leaving.
Finally, do not overlook reimbursements. Where your employer has repaid the cost, that part of the expense cannot be claimed again. Check expense policies before lodging, particularly if you have received support for internet, equipment or ergonomic furniture.
Remote work deductions for sole traders and business owners
Sole traders and businesses working from home may have different deduction considerations from employees. You may be able to claim business-related running costs, equipment and, in limited cases, occupancy expenses. The correct treatment depends on your business structure, how the premises are used and whether an area is clearly separate from private living spaces.
For businesses registered for GST, the GST treatment of an expense may also affect how it is recorded in the accounts and BAS. Good bookkeeping is especially useful here. It creates a reliable record of expenses throughout the year rather than leaving business owners to untangle personal and business costs at tax time.
Where household and business use are mixed, establish a reasonable method early and apply it consistently. This improves clarity, supports your claims and makes year-end reporting far less time-consuming.
Get the method right before you lodge
Your remote work deduction should reflect the way you actually worked, not a figure you have heard others claim. A careful calculation can protect you from overclaiming while ensuring legitimate expenses are not missed. If your records are incomplete, your working arrangements changed during the year or you are unsure which method produces the right outcome, a registered tax agent can help you work through the detail in plain English.
A few minutes spent keeping accurate records each week can turn a stressful tax-time question into a straightforward part of your return.
