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  • Home office expenses

    If you're an employee who 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.

    If your home is your principal place of business, you may be able to claim occupancy expenses. If so, you should refer to running your business from home. The other situations where you may be entitled to claim occupancy expenses are addressed below.

    In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home. CGT may apply if you are running a business from home or claiming occupancy expenses (like mortgage interest repayments or rates).

    For a summary of this content in poster format, see Employees working from home (PDF 194KB)This link will download a file.

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    Temporary work from home

    If you're an employee and temporarily work from home due to recent events, such as COVID-19 (coronavirus), bush fire and drought, you may be able to claim a deduction for expenses you incur relating to that work.

    You may be able to claim a deduction for additional running expenses you incur such as heating, cooling and lighting. You can also claim the work-related proportion of the decline in value of office equipment.

    In most cases, if you work from home as an employee and claim working from home expenses, there are no capital gains tax (CGT) implications for your home.

    You must keep records to show these expenses and how you have calculated your claim.

    Find out about:

    Expenses you can claim

    You may be able to claim:

    Check out the table below for the expenses you can claim as well as the three ways you can work at home, including::

    • Home is your principal place of work 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 have a dedicated work area – for example a study.
    • You work at home 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 and 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 because 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:

    Claiming for a computer, phone or other electronic device as a work-related expense

    Media:[Claiming for a computer, phone or other electronic device as a work-related expense]
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubgwogokExternal Link (Duration: 1:01)

    Calculating running expenses

    There are two ways to calculate your running expenses:

    Fixed rate

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

    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 either:

    • your actual hours spent working at home for the year
    • a diary for a representative four-week period to show your usual pattern of working at home.

    You can then apply the four-week representative period across the remainder of the year to determine your full deduction amount. However, if your work pattern changes you will need to create a new record.

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

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

    If you have a dedicated work area, you can claim additional running costs and the decline in value of office furniture used in the area for work purposes.

    To calculate actual expenses for your dedicated work area, you can:

    • keep a record of the number of actual hours you work from home during the income year
    • keep a diary for a representative four-week period to show your usual pattern of working at home
    • work out the decline in value of depreciating assets and
      • keep receipts showing the amount you spent on the assets
      • work out the percentage of the year you used those depreciating assets exclusively for work – you can claim a deduction for the proportion of the decline in value that reflects your work-related use of the depreciating assets
       
    • work out the cost of your cleaning expenses by adding together your receipts and multiply it by the floor area of your dedicated work area (floor area of the dedicated work area divided by the whole area of the house as a percentage) – your claim should be apportioned for any
      • private use of your home office
      • use of the home office by other family members
       
    • work out the cost of your heating, cooling and lighting by working out the following
      • the cost per unit of power used – refer to your utility bill for this information
      • the average units used per hour – this is the power consumption per kilowatt hour for each appliance, equipment or light used
      • the total annual hours used for work-related purposes – refer to your record of hours worked or your diary for this information.
       

    You must also take into account if any other members of your household use the home office and, if so, apportion your expenses accordingly.

    To claim a deduction for an asset that cost $300 or more, you need to calculate the decline in value for both the period you:

    • owned the assets during the income year
    • used the assets for work-related purposes.

    You can use the depreciation and capital allowances tool to calculate your deduction for the decline in value of equipment, furniture and furnishings that cost more than $300, use the depreciation and capital allowances tool to work this out.

    If you don't have a dedicated work area, you should work out the actual cost of your heating, cooling and electricity expenses. You can do this by working out the cost of running each unit you used per hour and multiplying that by the hours you worked from home. The amount of the additional expense is generally small, especially if there are other people using the area at the same time you are working. In those circumstances, there is no additional cost for lighting, heating or cooling.

    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 computer, Julia must take into account her own private use and also her family's private use of the home office and computer.

    End of example

     

     Example 2: no set work area

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

    If James's family is not at home or not in the lounge room with him, he can claim the specific running costs associated with the work he does at home. This includes 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 or cooling his lounge room. He is also able to claim for the cost of the electricity required to power his laptop for the hours that he uses it to work from home.

    If his 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, James could not claim the additional cost of lighting, heating and cooling his lounge room. However, he can still claim the cost of electricity required to power his laptop for the time he spent working and the work-related proportion of the decline in value of the laptop he uses to prepare reports.

    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. She is not reimbursed by her employer for these costs.

    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. This is because it reflects her work-related use of the office, as well as the cost of using her own internet connection and mobile phone for work. Natalie needs to apportion these expenses to take her private use into account.

    End of example

    Occupancy expenses

    Employees are generally not able to claim occupancy expenses. Occupancy expenses include:

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

    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 don't 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.

    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.

    See also:

    Phone and internet expenses

    You can claim a deduction for the work-related proportion of your phone and internet expenses. You must have paid for these costs and have records to support your claims.

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

    You need to keep records for a four-week representative period in each income year to claim a deduction of more than $50. These records include phone and internet bills.

    See also:

    Calculating phone and internet expenses

    Claim up to $50

    If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyse your bills. The rates you can use to work out the cost for your work calls are:

    • 25 cents for calls made from your landline
    • 75 cents for calls made from your mobile
    • 10 cents for text messages sent from your mobile.
    Actual expenses

    If you have a phone or internet plan where you received an itemised bill, you need to determine your percentage of work use over a four-week representative period. You can then apply this to the full year.

    You need to work out the percentage using a reasonable basis. This could include:

    • the number of work calls made as a percentage of total calls
    • the amount of time spent on work calls as a percentage of your total calls
    • the time you spent, or data used for work purposes compared to your private usage and that of all members of your household.

    If you have a bundled plan, you need to:

    • apportion the cost of the plan between the services provided
    • identify your work use for each service over a four-week representative period during the income year, which can then be applied to the whole year.

    The same method should be used for non-itemised plans.

    Records you must keep

    If you're an employee who works from home, you must keep records such as:

    • diary entries for a representative four-week period to show your usual pattern of working at home that show
      • you worked from home and made work-related phone calls
      • how you work out how much you used your equipment, home office and phone for work 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 for which you can't get any kind of evidence
    • itemised phone and internet accounts (paper or electronic) from where you can identify work-related calls and internet use, or other written records, such as diary entries if you don't get an itemised bill.

    If you use the four-week representative period to calculate your usage over the income year and your usual pattern of work changes, you will need to keep separate records to show your usage.

    For example, if you usually work from home one day a week and due to an emergency situation such as COVID-19, bush fire or drought you're required to work from home for an extended period, you will need to keep records for both:

    • the actual hours you’ve worked from home due to the emergency situation
    • your usual working from home arrangements.

    Your four-week representative period will no longer be valid in these circumstances.

    See also:

    Last modified: 27 Mar 2020QC 31977