If you work from home, you can claim the extra running costs it creates using one of two ATO methods: the fixed rate method, which is 70 cents for every hour you work from home, or the actual cost method, where you claim the real work-related portion of your bills. You choose whichever gives the bigger deduction, and the main catch is that the ATO now wants a record of your actual hours, not an estimate.
The fixed rate method (70 cents per hour)
This is the simple option. You multiply the hours you worked from home by 70 cents, and that single rate covers your electricity and gas, phone and internet, and stationery. Because those costs are already inside the rate, you cannot also claim them separately, that double-counting is one of the first things the ATO checks. You can still separately claim the decline in value of home-office furniture and equipment such as a desk, chair or computer.
The actual cost method
Here you work out the actual work-related portion of each running expense, based on your real usage. It takes more effort and more records (bills, and a way to show the work-related percentage), but it can produce a bigger deduction if you have high home-running costs or a dedicated work area.
The records you need
Whichever method you use, keep a record of the actual hours you worked from home across the whole year, such as a diary, timesheet or roster. Estimates are no longer accepted for the fixed rate method. Keep your bills too, and remember you can only claim the work-related part, not private use.
How MS Financial Services can help
We work out which method gives you the bigger, safe deduction and make sure your records will stand up. See our Tax & Compliance service or get in touch.
Frequently Asked Questions
What is the working from home rate for 2025-26?
The ATO fixed rate is 70 cents per hour worked from home, which covers electricity, gas, phone, internet and stationery. The ATO left this rate unchanged for 2026-27.
Can I claim my internet and phone separately?
Not if you use the fixed rate method, because they are already included in the 70 cents. Under the actual cost method you can claim the work-related portion of them.
Do I need to record my hours?
Yes. The ATO requires a record of your actual hours worked from home for the whole year. Estimates are not accepted for the fixed rate method.
Can I claim my desk and chair?
Yes. Home-office furniture and equipment are claimed separately as depreciating assets (or immediately if they cost $300 or less), on top of the fixed rate.
Fixed rate or actual cost, which is better?
Whichever gives the bigger deduction. The fixed rate is simpler; the actual cost method can be higher if your home running costs are significant. Keep records for both to compare.