70 cents for every hour you work from home. That is the fixed rate method, and for the 2025-26 return most people are lodging right now it is the number that matters.
Work 3 days a week from home for a full year and that is roughly 1,050 hours, so about $735 of deduction. At a 32% marginal rate including Medicare it puts around $235 back in your pocket.
Which is not a lot, and that is exactly why the rest of this matters. The 70c is the small part of most people’s claim. The bigger part sits outside the rate entirely, and the whole thing hangs on a record almost nobody keeps properly.
What the 70c actually buys you
The fixed rate covers 4 categories and only 4: electricity and gas for heating, cooling and lighting; home and mobile internet or data; mobile and home phone usage; and stationery and computer consumables such as printer ink and paper.
Use the rate and you cannot claim any of those separately. Not a portion of the internet bill, not the work calls on your mobile. They are already in the 70c.
I see the double claim every year. Someone takes the 70c for 900 hours and then adds 30% of their phone plan on top because it feels separate. It is not separate, and it is the easiest thing in the world for the ATO to spot.
Figure 1. What the 70 cents per hour covers, and what you claim on top of it.
The hours record is the real gate
This is the part that decides whether your claim survives a question.
You need a record of the actual hours you worked from home for the entire income year. A timesheet, a roster, a diary, a spreadsheet. Kept as you went, not reconstructed afterwards. The ATO’s wording on this is blunt: an estimate of your hours will not be acceptable.
The old concession where a representative 4 week diary could stand in for the year is gone. It ended on 30 June 2023 and a lot of people have not noticed, because the advice they read was written before that.
You also need at least one record for each expense the rate covers. One quarterly electricity bill and one internet bill is enough. That part is easy. The hours are the part people lose.
In practice, the conversation I have most often in September goes like this. A client worked from home 3 days a week all year, kept nothing, and arrives with their Outlook calendar open, hoping it counts. It does not: a calendar shows meetings, not hours worked from home, and half the entries are the same recurring stand-up. We end up claiming what can actually be substantiated, which is usually a fraction of the real figure. The irony is that the same client had bought a $900 standing desk and a $650 chair during the year and never mentioned either, because they assumed the 70c covered everything. The record they did not keep cost them less than the deduction they did not know about.
Where the money actually is
Depreciating assets sit outside the rate. Your desk, your chair, your monitor, your computer, your headset. These are claimable on top of the 70c and they are usually worth more than the hourly rate ever will be.
Anything costing $300 or less that you use mainly to produce non-business income comes off in full in the year you buy it. Keyboard, mouse, desk lamp, charger, webcam.
Anything over $300 is claimed as decline in value over its effective life. The same applies where an item forms part of a set costing more than $300, or where you buy several identical items adding up to more than $300. Assets under $1,000 can go into a low value pool instead, which uses a diminishing value rate.
Everything gets apportioned for private use. A laptop you use 60% for work gives you 60% of the decline in value, and you need a basis for that percentage. For the broader question of when something is written off immediately against depreciated, the logic in write it off now or depreciate it is the same logic that applies here.
When actual cost beats the fixed rate
The actual cost method means working out the real work related portion of every running expense instead of taking 70c. It is the same substantiation discipline that governs small business tax deductions generally: a number you can trace beats a number you can defend in theory.
It wins in a narrow set of cases. A dedicated room you can isolate the power usage for. A genuinely expensive internet plan that is mostly work. Someone running a lot of equipment, heating a single room all winter, with the bills to prove the apportionment.
It loses on paperwork for almost everyone else. You need evidence for each expense and a defensible apportionment basis for each one, not a flat percentage you picked. For a typical hybrid worker the fixed rate wins on effort alone, and the difference in dollars is small.
Run the comparison once, properly, and then leave it alone until something in the setup actually changes.
Rent and mortgage interest: 4 conditions, and most people fail the third
Occupancy expenses are the costs of owning or renting your home. Mortgage interest, rent, council and water rates, land taxes, house insurance.
Employees generally cannot claim them. To be eligible you have to meet all 4 of the ATO’s conditions: an area of your home set aside with the character of a place of business; income earning activities that require a place of business; working from home because your employer does not provide an alternative place of business; and exclusive or almost exclusive use of that area for work, not readily usable for anything else.
The third condition is the one that ends most claims. If your employer provides you with a place to work, you cannot claim occupancy expenses. An employer allowing you to work from another location does not count. So the hybrid worker who has a desk in the city office and chooses to use the spare room 3 days a week is out, no matter how dedicated that spare room is.
A spare bedroom with a bed in it fails the fourth condition too. The test asks whether the area is readily usable for private purposes, and a guest room is.
The CGT trade nobody models
Here is the part that should change the decision even for people who are eligible.
Claiming running expenses has no capital gains tax consequence for your home. None. Claiming occupancy expenses does, if you bought the home after 20 September 1985.
Once you claim interest deductions on part of your home, you no longer get the full main residence exemption on that part for that period. The ATO recommends getting a market valuation when you first start using the home to produce income, because special cost base rules apply from that point.
Whether the trade is worth it depends on the numbers, and it genuinely can go either way. A long ownership period with a short income producing window and a modest floor area percentage often comes out fine. A small apartment with a decade of a dedicated office does not. The point is that it is a calculation, and the valuation has to happen at the start rather than at sale. For the mechanics of how the exemption gets apportioned, how CGT works on property walks through it.
My own view is simple. If a client is on the fence about occupancy expenses, the deduction is rarely large enough to justify carrying a partial CGT exposure and a valuation obligation for the entire time they own the house.
What I would do before lodging
- Find your hours. A real record for the whole year, or accept a smaller claim honestly.
- Pick one method and apply it consistently. Do not take the 70c and then add phone or internet on top.
- List every work item you bought during the year. Under $300 comes off now, over $300 is depreciated, and this is usually the larger number.
- Work out your private use percentage for shared equipment and write down how you got there.
- Keep one bill for each expense the rate covers. One electricity bill, one internet bill.
- If you are thinking about rent or mortgage interest, check all 4 conditions first, then price the CGT consequence before you claim anything.
Keeping the hours log, the asset list and the bills in one place for the whole year is the entire job, and it is the thing Tax Assistant is meant to make boring. The broader record rules are in what records to keep for tax.
Frequently asked questions
How many cents per hour can I claim for working from home?
70 cents per work hour for the 2024-25 and 2025-26 income years. It was 67 cents for 2022-23 and 2023-24, and 52 cents for the 2 years before that. The rate covers electricity and gas, internet and data, phone usage, and stationery and computer consumables.
Can I estimate my work from home hours?
No. The ATO requires a record of the actual hours worked from home across the whole income year, kept as you go, and says plainly that an estimate will not be acceptable. The earlier concession allowing a representative 4 week period ended on 30 June 2023.
Can I claim my desk and chair as well as the 70 cents?
Yes. Furniture and technology are depreciating assets and sit outside the fixed rate entirely. Items of $300 or less are deductible in full in the year you buy them, and anything above that is claimed as decline in value over its effective life, apportioned for any private use.
Can I claim rent or mortgage interest for my home office?
Only if you meet all 4 conditions for occupancy expenses, and most employees do not. The condition that catches people is that you must be working from home because your employer provides no alternative place of business. Being allowed to work from home is not the same thing as having nowhere else to work.
Will claiming a home office affect the tax on selling my house?
Running expenses have no effect on your main residence exemption. Occupancy expenses do, for homes acquired after 20 September 1985, because claiming interest on part of your home means that part is no longer fully exempt for that period. Get a market valuation when the income producing use starts, since special cost base rules apply from then.
Is the fixed rate better than the actual cost method?
For most hybrid workers, yes, because the actual cost method needs evidence and a defensible apportionment for every single expense. Actual cost tends to win only where there is a dedicated space with isolatable running costs or unusually high work related bills. Compare the 2 once with real figures rather than assuming.
The technical detail
Current as at October 2026.
Fixed rate method. 70 cents per work hour for the 2024-25 and 2025-26 income years. 67 cents for 2022-23 and 2023-24. 52 cents for 2020-21 and 2021-22. As at October 2026 the ATO had not published a rate for the 2026-27 income year on its fixed rate method page.
Expenses covered by the rate. Home and mobile internet or data; mobile and home phone usage; electricity and gas for heating, cooling and lighting; stationery and computer consumables. No separate deduction is available for any of these while the rate is used.
Records for the fixed rate method. A record of the actual hours worked from home for the entire income year, such as a timesheet, roster or diary, kept contemporaneously. An estimate is not acceptable. At least one record for each expense the rate covers. The representative 4 week period concession ceased on 30 June 2023.
Depreciating assets. Claimed separately from the rate. Immediate deduction for items costing $300 or less used mainly to produce non-business income. Decline in value over effective life for items above $300, items forming part of a set costing more than $300, and identical items totalling more than $300. Low value pool available for assets under $1,000, using a diminishing value rate. Apportionment required for private use. Repairs and maintenance on those assets are also separately deductible.
Occupancy expenses. Mortgage interest, rent, council and water rates, land taxes and house insurance premiums. Available only where all of the following are met: an area of the home set aside having the character of a place of business; income earning activities requiring a place of business; the employer does not provide an alternative place of business; and the area is used exclusively or almost exclusively for work and is not readily usable for other purposes. Apportioned by floor area, and by time where the area is used for work for part of the year only.
CGT consequence. Claiming running expenses only has no capital gains tax implications for the main residence. Claiming occupancy expenses on a home acquired after 20 September 1985 means the full main residence exemption is not available. Section 118-192 of the Income Tax Assessment Act 1997 contains the market value cost base rule that can apply when a dwelling is first used to produce income, and the ATO recommends obtaining a market valuation at that point.
Record retention. Generally 5 years from the date of lodging the return. For depreciating assets, 5 years from the last decline in value claim. For occupancy expenses, records must be kept for the whole period of ownership and at least 5 years after sale.
