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  • Home office expenses

    If you're an employee who regularly works from home, you may be able to claim a deduction for expenses relating to that work. These are generally home office running expenses, and phone and internet expenses.

    In limited circumstances you may also be able to claim occupancy expenses. One such circumstance is if your home is your principal place of business. If that is the case, you should refer to running your business from home. The other situations where you may be entitled to claim occupancy expenses are addressed below.

    For a summary of this content in poster format, see Employees working from home: the other kind of housework (PDF 251KB)This link will download a file.

    Expenses you can claim

    The table below outlines the ways you can work at home and the expenses you can claim, when:

    • home is your principal place of work (that is, no other work location is provided to you by your employer or your home is a place of business) and you have a dedicated work area that is unlikely to be suitable for domestic use
    • home is not your principal place of work but you work there as a matter of convenience and you have a dedicated work area – for example a study
    • you work at home as a matter of convenience but you don't have a dedicated work area – for example you use a room with a dual purpose such as a lounge room.
    Home office expenses you can and can't claim

    Expenses

    Home is principal workplace with dedicated work area

    Home not principal workplace but has dedicated work area

    You work at home but no dedicated work area

    Running expenses

    Yes

    Yes

    No (see note 1)

    Work-related phone & internet expenses

    Yes

    Yes

    Yes

    Decline in value of a computer (work related portion)

    Yes

    Yes

    Yes

    Decline in value of office equipment

    Yes

    Yes

    Yes

    Occupancy expenses

    Yes

    No

    No

    Note 1: Generally, an employee who works at home and who does not have a dedicated work area will not be entitled to claim running expenses or their claim for running expenses will be minimal. This is due to the fact that they can only claim the additional running expenses incurred as a result of working from home – see Example 2.

    Running expenses

    If you work from home, you can claim the work-related proportion of your running expenses. These include:

    • home office equipment including computers, printers, telephones and furniture and furnishings. You can claim the
      • full cost for items up to $300
      • decline in value for items over $300
       
    • heating, cooling and lighting
    • the costs of repairs to your home office equipment, furniture and furnishings
    • cleaning costs
    • other running expenses including computer consumables (for example, printer paper and ink) and stationery.

    Only the additional running expenses incurred as a result of working from home are deductible, see Example 2.

    Watch:

    Media: [Claiming a computer, phone or other electronic device as a work-related expense]
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubgwogExternal Link (Duration: 1:01)

    Calculating running expenses

    There are two ways to calculate your running expenses:

    Fixed rate

    Instead of recording all of your actual expenses for heating, cooling, lighting, cleaning and the decline in value of furniture, you can claim a deduction of 52 cents for each hour you work from home.

    This rate is based on average energy costs and the value of common furniture items used in home business areas.

    To claim using this method keep records of your actual hours spent working at home for the year, or keep a diary for a representative four-week period to show your usual pattern of working at home.

    You need to separately work out all other running expenses, such as:

    • phone and internet expenses
    • computer consumables and stationery
    • decline in value on computers or other equipment.
    Actual expenses

    To calculate actual expenses if you have a dedicated work area, you:

    • record the total expenses for lighting, cleaning, heating and cooling for your home and electricity for depreciating assets used for the year. This will generally be your electricity bills, gas bills (if you have gas heating) and cleaning invoices
    • work out the proportion of that expense that relates to your dedicated work area by calculating the floor area of the area you use for work as a percentage of the total floor area of your home
    • work out the percentage of the year you used that part of your home exclusively for work – in working this out, you must take into account the use of that area by other members of your household – for example, if the other people in your household use the room because that is where the computer is located you must take all of their use, along with your personal use, into account when coming up with the work-related percentage – see Example 1.

    If you did not have a dedicated work area, the additional expense for lighting, heating and cooling and electricity should be calculated by determining the actual cost of running each unit you used per hour and multiplying that by the hours you spent working at home. Generally the amount will be small. This will be particularly so where other people are using the area at the same you are working there. In those circumstances there will be no additional cost for lighting or heating and cooling – see Example 2.

    You calculate your deductions for decline in value by working out the amount of depreciation for each item for the year and claim the proportion of that amount which reflects your work-related use.

    See also:

    Example 1: A dedicated room for work

    Julia is a lawyer who works as an employee for a large city firm. Julia's employer has agreed that she can work from home two days per week.

    She has a home office that she works in on the days she does not travel to the city. Julia and members of her family also use the home office for private purposes, including personal use of the computer and to store household items.

    Julia can claim the running costs, but only the portion of the expenses that relate to her work-related use of the home office. In working out her work-related use of the home office and the computer, Julia must take into account not only her own private use but also her family's use of the home office and the computer.

    End of example

     

    Example 2: No set work area

    Alastair is a high school teacher. From time to time, Alastair works in the lounge room at home – for example, to mark tests and prepare end of term reports. He does not have a room set aside exclusively for work.

    If Alastair's family is not home, he can claim running costs associated with the work he does at home, such as the work-related portion of the decline in value of the laptop he used to prepare the reports and the additional cost of lighting, heating and cooling his lounge room. He is also entitled to claim the cost of the electricity to power his laptop for the hours he spends working at home.

    If Alastair's family was in the lounge room watching television at the same time that he was in there marking tests and preparing end of term reports, he could only claim the cost of electricity required to power his laptop for the time he spent working. That is the only additional cost he incurs as a result of working from home.

    End of example

     

    Example 3: Chooses to work from home

    Natalie is a web developer for a large company and usually works from her office in the city. While Natalie is not required to work from home, her employer supports it. Natalie is not provided with the work equipment to use at home, so she uses her own laptop, internet connection, mobile phone and thumb drive and completes her work in her study.

    Natalie is entitled to claim running costs including the work-related proportion of the decline in value on her laptop, her office desk and chair, and a percentage of lighting, heating and cooling that reflects her work-related use of the office. Natalie needs to apportion these expenses to take her private use into account.

    End of example

    Occupancy expenses

    Occupancy expenses include:

    • rent
    • mortgage interest
    • property insurance
    • land taxes
    • rates.

    Employees are generally not able to claim occupancy expenses. You can only claim the work-related proportion of your occupancy expenses in two very limited circumstances where:

    • the space in the home is a place of business, and not suitable for domestic use – for example, a doctor or dentist surgery or a hairdresser studio in the home
    • no other work location is provided to an employee by an employer and the employee is required to dedicate part of their home to their employer's business as an office – you can claim the portion of these costs that relate to a clearly identified place of business.

    If you claim occupancy expenses, you do not qualify for the capital gains tax (CGT) main residence exemption for the part of your home that you use for work. If you use your home as a place of business there may be CGT implications when you sell it.

    See also:

    Calculating occupancy expenses

    If you are eligible to claim occupancy expenses, you can work them out by calculating the:

    Total expenses × floor area × percentage of year that part of your home was used exclusively for work

    If the area you use for work takes up 15% of your home and you used it for work for the whole of the year, you can claim 15% of your occupancy expenses.

    Phone and internet expenses

    There are two ways to calculate your phone and internet expenses:

    • you can claim up to $50 with limited documentation
    • you can calculate your actual expenses which involves keeping records of the expenses incurred and determining the work-related proportion of the expenses.

    See also:

    Records you must keep

    You must keep records of your expenses, such as:

    • a diary you have created to work out how much you used your equipment, home office, phone and internet for business purposes over a representative four-week period
    • receipts or other written evidence, including for depreciating assets you have purchased
    • diary entries to record your small expenses ($10 or less) totalling no more than $200, or expenses you can't get any kind of evidence for
    • itemised phone accounts where you can identify work-related calls, or other records, such as diary entries if you do not get an itemised bill.

    See also:

    Last modified: 17 Jan 2019QC 31977