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 or other written evidence, which shows 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 3 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
Using the actual costs method, you work out your deduction by calculating the actual additional expenses you incur when working from home. This includes expenses you incur for:
- the decline in value of depreciating assets – for example, home office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices.
- electricity and gas (energy expenses) for heating, cooling and lighting
- home and mobile phone, data and internet expenses
- stationery and computer consumables, such as printer ink and paper
- cleaning your dedicated home office.
Where you incur running expenses for both private and work purposes, you need to apportion your deduction on a fair and reasonable basis. You can only claim the work-related portion as a deduction.
In limited circumstances, you may also be able to claim occupancy expenses (such as mortgage interest or rent).
Decline in value of depreciating assets
If the item cost $300 or less and you use it mainly for a work-related purpose, you can claim an immediate deduction for its cost in the year you buy it.
You can claim a deduction for the decline in value of depreciating assets over the effective life of the item, if it either:
- cost more than $300
- forms part of a set that together cost more than $300.
You may choose to work out the decline in value of low-cost assets and low-value assets with a cost or opening adjustable value of less than $1,000 through a low-value pool. You calculate decline in value of depreciating assets in a low-value pool using a diminishing value rate.
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.
For example, if you buy a device for $289 that 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 buy it.
You can use the depreciation and capital allowances tool to calculate your deduction for the decline in value of equipment, furniture and furnishings.
To claim a deduction for the decline in value of depreciating assets, you must:
- keep receipts showing the amount you spent on the assets
- show the percentage of the year you used those depreciating assets exclusively for work.
If you have a dedicated home office, 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 for cleaning expenses 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.
Electricity and gas for heating, cooling and lighting
You can work out the cost of your electricity and gas (energy expenses) for heating, cooling and lighting by using the:
- cost per unit of power you use (your utility bill has this information)
- average units you use per hour, which is the power consumption (this information may be found in the manufacturer information, the star energy rating label or by searching the internet) and is
- per kilowatt (kw) hour for each electrical appliance, equipment or light you use
- per megajoule (MJ) hour for gas heating appliances you use
- total annual hours used for work-related purposes by checking your record of hours worked or your diary.
Example: electricity for cooling and heating
Ben works at home several days per week and keeps a record of the total hours he works from home. His record shows he worked a total of 768 hours from home in 2022–23.
When he works from home, Ben sits in a separate room of his house and always uses the air conditioner in the room when he is working. His air conditioning unit is a small with a 3.5 kilowatt (kw) capacity. Based on the unit's energy efficiency rating, the unit costs Ben 1.09 kw per hour to run.
Based on his electricity bills, Ben pays 27.81c per kilowatt hour (28 c rounded up) for electricity.
Ben calculates the cost of cooling and heating for the room he uses when he is working from home as:
1.09 kw per hour × 0.28 per hour = 30.52c per kw hour
768 hours × 30.52 c = $234.39.
Ben can also use the online home office expenses calculator to work out his actual expenses. Ben would fill out the following:
- Select income year: 2022–23
- Do you want to claim a deduction based on actual expenses?: Yes
- Choose one of the following methods to calculate electricity expenses: Actual running expenses
- Cost per unit of electricity used: 0.28c
- Average units of electricity used per hour for income producing purposes: 1.09kw
- Hours of electricity used for income producing purposes during the year: 768.
Phone, data and internet
If you receive an itemised phone or internet bill, you need to work out your work-related use over a continuous 4-week period. You can use your work-related percentage for the 4-week period to work out your expenses for the whole income year.
For example, you can mark your work-related calls on your monthly phone bill and work out your work-related use based on the number of those phone calls compared to your total calls.
For more information, see PSLA 2001/6 Verification approaches for electronic device usage expenses.
Stationery and computer consumables
Work out the cost of computer consumables and stationery by using receipts for the items you buy. If you use the item for both private and work-related purposes, you can only claim the work-related portion of the expense.
Use our home office expenses calculator to help work out your deduction.Home office expenses calculator
To claim your work from home expenses using actual costs, you must keep:
- either a record showing
- the number of actual hours you work from home during the entire income year – for example, a timesheet or spreadsheet
- a continuous 4-week period that represents your usual pattern of working at home – for example, a diary.
You must also keep records that show:
- the additional running expenses you incurred while working from home, such as receipts, bills and other documents
- how you worked out the amount of your deduction.
You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year.myDeductions toolCheck if you're eligible to calculate your work from home expenses using the actual cost method.