The fixed rate method for calculating your deduction for working from home expenses has been revised. This revised method is available from 1 July 2022.
The fixed rate method has been revised to:
- increase the rate per work hour that you can claim when you work from home
- change the expenses the rate covers
- change the records you need to keep
- remove the requirement to have a home office set aside for work.
If you don't use the revised fixed rate method, you need to use the actual costs method to claim a deduction for the additional expenses you incur as a result of working from home.
If you are working out your claim for working from home expenses for 2021–22 or earlier income years, see Prior year work from home methods.
Media: Working from home deductions
https://tv.ato.gov.au/ato-tv/media?v=bd1bdiudscnt7bExternal Link (Duration: 01:23)
To use the revised fixed rate method, you must:
- incur additional running expenses as a result of working from home
- have a record of the total number of hours you work from home and the expenses you incur while working at home
- have records for expenses the fixed rate per work hour doesn't cover and that show the work-related portion of those expenses.
You can claim 67 c for each hour you work from home during the relevant income year. The rate includes the additional running expenses you incur for:
- home and mobile internet or data expenses
- mobile and home phone usage expenses
- electricity and gas (energy expenses) for heating, cooling and lighting
- stationery and computer consumables, such as printer ink and paper.
The rate per work hour (67c) includes the total deductible expenses for the above additional running expenses. If you're using this method, you can't claim an additional separate deduction for these expenses.
How to claim expenses the fixed rate doesn't include
You can separately claim a deduction for the work-related use of technology and office furniture such as chairs, desks, computers, bookshelves. These are generally depreciating assets that decline in value over time. You can also claim the repairs and maintenance of these items.
If the item cost $300 or less and you use it mainly for a work-related purpose, you can claim an immediate deduction for the cost in the year you buy it. This may include items, such as keyboards, computer mouses, power boards, desk lamps and chargers.
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.
Where you use your depreciating assets for both work and private purposes, you need to apportion your decline in value deduction. You can only claim the work-related portion as a deduction.
In limited circumstances where you have a dedicated home office, you may also be able to claim:
- occupancy expenses (such as mortgage interest or rent)
- cleaning expenses (such as the cost of cleaning that relates to the work-related use of a room in your house set up as a home office).
For more information about the deductions allowable for 'home office' expenses, see PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home - ATO compliance approach
Example: no additional deduction as expense covered by fixed rate
Keisha is an employee engineer. During 2022–23, Keisha works from home and uses her timesheets to record the hours she spends working from home.
At the end of the income year, Keisha works out that she worked at home for a total of 843 hours.
When she is working from home, Keisha incurs electricity expenses, internet expenses and mobile phone expenses. However, Keisha also uses her mobile phone for work purposes on days when she is not working from home.
If Keisha uses the revised fixed rate method to calculate her working from home expenses deduction, she can claim a deduction of $564. That is, 843 hours × 67c per work hour in her 2022–23 tax return.
Keisha can't claim a separate deduction in her tax return for the mobile phone expenses she incurs when she's not working from home as the rate per work hour includes this expense.
If Keisha wants to claim all of her work-related mobile phone expenses, she will need to use the actual costs method to calculate her claim for working from home expenses.End of example
Use our home office expenses calculator to help work out your deduction.Home office expenses calculator
You can also calculate your deduction manually using the steps below.
Steps for calculating your work from home deduction manually
Before you calculate your deduction, check you have all the records you are required to keep.
Step 1: Work out the total number of hours you worked from home
Work out the total number of hours you worked from home during the income year using your records – for example, your timesheets, rosters, diary or similar document you keep at the same time as when you work.
Step 2: Multiply your total work from home hours by the rate per hour
Multiply the total number of hours worked from home during the year by 67c per hour.
Step 3: Work out the decline in value of depreciating assets used for working from home
Calculate the work-related decline in value of any depreciating assets that you used to work from home during the income year.
Use our Depreciation and capital allowances tool to help work this out.
For more information, see Depreciating assets you use for work.
Step 4: Work out the amount of any other working from home expenses you incurred that the rate per hour doesn't cover
Use your records to work out the amount of any other work-related expenses you incurred as a result of working from home.
Don't include any amount for expenses the rate per work hour covers.
Step 5: Add the amounts at step 2, step 3 and step 4 together
The total of step 2, step 3 and step 4 is the amount you claim as a working from home deduction in your tax return.
Example: deduction calculated using revised fixed method
Yang is employed as a software engineer. On 6 December 2022, Yang starts working from home 2 days a week and at the office 3 days a week.
On 1 December 2022, Yang buys a desk for $250 and an office chair for $299. Yang only uses the desk and office chair when working from home.
When working from home, Yang uses his work laptop, his personal internet connection and his personal mobile phone. Yang also uses the air conditioner in his spare room to cool and heat the room he works in.
Yang uses a spreadsheet to record the time he starts and finishes working from home. Yang also keeps one quarterly invoice for his electricity expenses, one monthly internet bill and one monthly mobile phone bill for the period between 6 December 2022 and 30 June 2023.
At the end of the 2022–23 income year, Yang decides to use the revised fixed rate method to calculate his working from home deduction. Yang calculates his deduction manually as follows:
- Yang uses his spreadsheet to calculate that he worked from home for a total of 560 hours.
- Yang calculates his deduction for electricity, mobile phone and internet by multiplying the total number of hours he worked from home by the hourly rate.
His calculation is:
560 hours × 67c per work hour = $375
- Yang works out his decline in value deduction.
As the desk and office chair Yang bought cost less than $300 each and he only uses them when he works from home, he can claim the full cost of the desk and the office chair as a decline in value deduction for the 2022–23 income year.
His deduction is:
Chair – $299
Desk – $250
- Yang has no other expenses.
- Yang calculates his total deduction by adding the amount he calculated at Step 2 and Step 3. This is calculated as:
$375 + $299 + $250 = $924 (rounded to the nearest whole dollar)
When he lodges his 2022–23 tax return, Yang includes a deduction of $924 for his working from home expenses.End of example
To claim your working from home deduction using this method, you must keep:
- a record of the number of actual hours you work from home during the entire income year – for example, a timesheet, roster, diary or other similar document
- at least one record for each of the additional running expenses you incur that the rate per work hour includes – for example, if you incurred electricity and stationery expenses keep one quarterly bill for your electricity expenses and one receipt for your stationery expenses
You need to keep your records for 5 years (in most cases) from the date you lodge your tax return.
You must keep records for depreciating assets from the time you buy them, that shows
- the amount spent on depreciating assets you buy
- the percentage of the year you use your depreciating assets exclusively for work, such as a diary or similar document.
You must also keep these records for other running expenses you are claiming as a separate deduction.
You need to keep these records for 5 years from the date of your last claim for decline in value.
If you haven't been keeping a record of the actual hours you worked from home, for the 2022–23 income year only, you must be able to provide both:
- a representative record of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023 – for example, any kind of record of the hours you worked from home for a particular period that you can apply to the whole 8 month period.
- a record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023.
If you haven't kept receipts or written evidence of your depreciating assets, you may still be able to claim a decline in value deduction if:
- you didn't keep it because you were using the fixed rate method or shortcut method to calculate your working from home deduction in the income year you purchased the asset
- you have other evidence or records which show
- you incurred the cost of the depreciating asset
- when you bought the depreciating asset
- your work-related use of the depreciating asset.
For more information, see TR 97/24 Income tax: relief from the effects of failing to substantiate.
Example: Representative record of hours worked from home
Wanda has an agreement with her employer to work from home one day a week. She is required to work 8 hours each working day (40 hours per week). Wanda sits at her kitchen table when she works at home and uses her employer provided laptop and mobile phone. Wanda uses her own internet connection and electricity.
Wanda keeps one monthly internet bill and a quarterly electricity bill but she doesn't keep any records of the hours she spent working from home during the period from 1 July 2022 to 28 February 2023.
Wanda has evidence of:
- her agreement to work at home one day per week
- her regular working hours
- taking annual leave for 2 weeks during the period.
Wanda can use these documents to work out the hours she worked from home during the first 8 months of the year. She works this out as:
Weeks from 1 July 2022 to 28 February 2023 = 34 weeks
34 weeks − 2 weeks (annual leave) = 32 weeks
(32 weeks × 1 day per week) × 8 hours per day = 256 hours
For the period from 1 March 2023 to 30 June 2023, Wanda keeps a record in her email calendar of when she starts and finishes work (including any breaks) on the day she works from home each week. At the end of the 2022–23 income year, Wanda calculates the hours she worked from home during this 4 month period as 129 hours.
Wanda can claim a deduction for her working from home expenses using the revised fixed rate method because she has kept records of:
- the expenses she incurred which are covered by the rate per hour, that is, her electricity and internet expenses
- a representative record of her hours worked from home for the period 1 July 2022 to 28 February 2023
- a record of the actual hours she worked from home during the period 1 March 2023 to 30 June 2023.
Wanda calculates deduction as:
(256 hours + 129 hours) × 67c = $257 (rounded up to the nearest whole dollar).End of example
You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year.myDeductions toolCheck your eligibility to calculate your working from home expenses using the fixed rate method - 67c per hour.