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  • Working from home expenses

    Employees working from home may be able to claim a deduction for the expenses you incur relating to your work.

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    Eligibility to claim

    To claim your working from home expenses, you must:

    • be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
    • incur additional expenses as a result of working from home.

    You can claim a deduction for the additional running expenses you incur as a result of working from home.

    Running expenses are expenses which relate to the use of facilities within your home and include:

    • electricity expenses for heating or cooling and lighting
    • the decline in value of office furniture and furnishings as well other items used for work – for example, a laptop
    • internet expenses
    • phone expenses.

    In limited circumstances, you may also be entitled to claim occupancy expenses.

    If your employer pays you an allowance to cover your working from home expenses, you must include it as income in your tax return.

    If you're a sole trader or business owner and your home is your principal place of business, see Deductions for home-based business expenses.

    How to claim work from home expenses

    To claim a deduction for expenses you incur when working from home you need to:

    • use one of the methods set out below to calculate your deduction
    • keep records that show you incurred the expenses.

    You can use the method that suits your circumstances. The methods to choose from include the:

    • Fixed rate method
      An amount per work hour for additional running expenses plus expenses not covered by the fixed rate
    • Actual cost method
      The actual expenses you incur as a result of working from home
    • Shortcut method
      An all-inclusive rate per work hour, only available from 1 March 2020 to 30 June 2022

    Changes to the work from home methods

    We are updating the methods available to calculate your working from home expenses for the 2022–23 income year.

    Make sure you have evidence to support your deduction claims.

    From 1 July 2022, you should keep:

    • records of all the hours you work at home
    • receipts for all depreciating assets or equipment you use when you work at home
    • records of your personal and work-related use of assets.

    You can use the myDeductions tool in the ATO app to help keep track of your expenses.

    Calculate your work from home deduction

    Use our Home office expenses calculator to help you work out your deduction.

    Expenses you can't claim

    You can't claim a deduction for the following expenses if you're an employee working at home. These include:

    • coffee, tea, milk and other general household items, even if your employer may provide these at work
    • costs that relate to your children's education such as equipment you buy – for example, iPads and desks, subscriptions for online learning
    • items your employer provides – for example, a laptop or a phone
    • any items where your employer pays for or reimburses you for the expense.

    Occupancy expenses

    Occupancy expenses are expenses you pay to own, rent or use your home. They include:

    • mortgage interest
    • rent
    • council and water rates
    • land taxes
    • house insurance premiums.

    As an employee working from home, generally:

    • you can't claim occupancy expenses
    • there will be no capital gains tax (CGT) implications for your home.

    You can only claim occupancy expenses if you can show that:

    • it was necessary for you to work from home because your employer doesn't provide you with an alternative place to work from
    • the area of your home that you use for work is exclusively or almost exclusively used for work purposes and isn't readily capable of being used for any other purpose.

    Occupancy expenses can generally be apportioned on a floor area basis. You must also apportion your expenses on a time basis if you only use that area of your home for work purposes for part of the year.

    Example: occupancy expenses deductible

    Abdul works for a statutory authority in Brisbane who permanently closed all their offices at the end of January 2022. From 1 February 2022, Abdul sets aside a room in his house for his work with the statutory authority. The floor area of the room is 10% of the floor area of the whole house.

    His employer provides him with the equipment necessary to fulfil his work functions and they pay for a work, health and safety check on the room he uses for working at home.

    Abdul locks the door to the room when it is not in use so his children can’t get in and he doesn’t use it for non-work purposes. Abdul can claim a deduction for occupancy expenses relating to working from home for 5 months of the year because:

    • his employer does not provide him with a work location
    • it is necessary for him to work from home
    • the room he uses is used exclusively for work purposes.

    Abdul's occupancy expenses for the 2021–22 income year are $24,918. That is:

    • mortgage interest $19,524
    • council and water rates $4,259
    • home insurance $1,135

    Abdul calculates his deduction for occupancy expenses as follows:

    Total occupancy expenses × floor area percentage × time used for work purposes

    $24,918 × 10% × (5 months ÷ 12 months) = $1,038.

    As Abdul can claim mortgage interest expenses as a deduction, he will be required to pay tax on any capital gain he makes when he sells his home. He can't claim the full main residence exemption.

    End of example
    Last modified: 22 Aug 2022QC 31977