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  • Actual cost method

    You can use the actual cost method to claim a deduction for actual expenses you incur as a result of working from home.

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    To use the actual cost method to claim actual expenses, you must:

    • incur additional running expenses as a result of working from home
    • keep records, for example receipts or other written evidence, which show the amount:  
      • you spend on expenses
      • you spend on depreciating assets you buy and use while working from home
      • of work-related use for your expenses and depreciating assets.

    You don't incur additional running expenses if other members of your household (who are not working from home) are in the same room as you while you are working from home.

    Example: working from a lounge room

    Lee works from her lounge room while her partner and three children watch television. Lee isn't incurring any additional costs for lighting, heating or cooling as a result of working in that room, so she can't claim a deduction for them.

    End of example

    How it works

    Using the actual costs method, you work out your deduction by calculating the actual expenses you incur to produce your income when working from home. This may include the following expenses:

    If you don't have a dedicated work area, such as a home office, you will generally only incur minimal additional running expenses.

    Decline in value of depreciating assets

    If the depreciating assets you use when you are working from home cost $300 or more, you can only claim a deduction for their decline in value over their effective life. If you use the asset for work and private purposes, you can only claim the work-related portion of the decline in value as a deduction.

    You can use the depreciation and capital allowances tool to calculate your deduction for the decline in value of equipment, furniture and furnishings.

    For depreciating assets that cost less than $300 that are used mainly for work-related purposes, you can claim the total cost of the asset in the year it was purchased. However, you still need to reduce your deduction to account for any private use of the asset.

    For example, if you purchase a device for $289 which you use 80% of the time for work-related purposes and 20% of the time for private purposes, you can only claim a deduction of $231 (80% × $289) in the income year you purchased it.

    Work out the decline in value of depreciating assets and: 

    • keep receipts showing the amount you spent on the assets
    • show the percentage of the year you used those depreciating assets exclusively for work – you can claim for the decline in value that reflects your percentage of work-related use of the depreciating assets.

    Cleaning expenses

    If you have a dedicated work area, work out the cost of your cleaning expenses and apportion your claim for any:

    • private use of your home office
    • use of the home office by other members of your household.

    For example, if you have a room set up as a home office, add together your receipts and multiply by the floor area of the dedicated work area, divided by the whole floor area of the house. Then reduce this amount by the percentage of private use by yourself and the use of the home office by other household members.

    Heating, cooling and lighting

    Work out the cost of your heating, cooling and lighting by using the:

    • cost per unit of power used (your utility bill has this information)
    • average units used per hour, which is the power consumption per kilowatt hour for each appliance, equipment or light used
    • total annual hours used for work-related purposes by checking your record of hours worked or your diary.

    Phone, data and internet

    If you receive an itemised phone or internet bill, you need to work out your work-related use over a 4 week representative period. You can use your work-related percentage for the representative period to work out your expenses for the whole income year.

    Computers consumables and stationery

    Work out the cost of computer consumables and stationery by using receipts for the items you purchase. If you use the item for both private and work-related purposes, you can only claim the work-related portion of the expense.

    Record keeping for actual costs method

    To claim your work from home expenses using actual costs, you must either keep a:

    • record of the number of actual hours you work from home during the income year
    • diary for a representative 4 week period to show your usual pattern of working at home.

    You must also keep all the receipts, bills and other documents which show the additional running expenses you incurred while working from home and that you used to work out your deduction.

    You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year. It’s a fast, easy way to capture information on the go by taking and uploading photos of receipts.

    Calculate your work from home deduction

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

    Completing your tax return

    Once you calculate your deduction, enter the amount at 'Other work-related expenses' in your tax return.

    Last modified: 29 Jun 2022QC 66147