Working from home part of the week adds up. Two days a week for 48 weeks is about 768 hours. At the fixed rate of 70c an hour for 2025–26, that's a $538 deduction.
The catch is the record: the ATO wants the actual hours you worked from home, written down as you go. In a May 2025 Xero survey of Australians confused by deduction rules, working-from-home costs (21%) were among the areas named most.
Here's how the two methods work, and which one pays more.
The Two Methods — And Why Choosing Wrong Costs You Hundreds
The ATO gives you two ways to claim work-from-home running costs. The right one depends on your records and how much you spend.
Method 1: The Fixed Rate — 70 Cents Per Hour
For every hour you genuinely worked from home in 2025–26, you can claim 70 cents from the ATO. That covers electricity, gas, internet, phone, and stationery — bundled into one simple rate.
Example: Sarah works from home 4 days a week. Over 48 weeks, that's roughly 1,536 hours. At 70c/hr: $1,075 deduction — no receipts needed for running costs, just a full-year record of actual hours worked.
How to apply: Use a timesheet app, your calendar, or your employer's rostering system to log actual hours every week. The ATO no longer accepts a 4-week estimate extrapolated over the year.
Method 2: The Actual Cost Method — Where the Real Money Is
If you have a dedicated home office — a room used exclusively for work — the actual cost method lets you claim the real work-related proportion of every bill: electricity, internet, phone, office furniture depreciation, and cleaning.
Example: James has a spare bedroom that functions as his full-time office. It's 15% of his home's floor area. His annual electricity bill is $3,200. Deductible electricity: $480. Add $600 from a dedicated internet plan, $340 in depreciation for his desk and monitor — total: $1,420 deduction.
How to apply: Measure your office vs total home floor area, collect 12 months of bills, and calculate depreciation on any equipment purchased. Complex, but worth it for high-energy or large home offices.
Velofy's Tax Advisor models both scenarios instantly based on your hours, bills, and income.
Find My Hidden WFH Deductions Free → Free · No account needed · ATO 2025–26 rulesThe ATO's Watch List: Don't Get Flagged
Working-from-home claims are a regular ATO focus. The ATO named them among its priorities for tax time 2025.
Three things that trigger a WFH audit:
- Claiming home office expenses with no record of actual hours worked
- Claiming rent or mortgage repayments as an employee
- Claiming 100% of internet or phone bills when they have clear personal use
Step-by-Step: Claim Without Getting Audited
- Choose your method — Fixed rate (simpler) or actual cost (usually higher)
- Log your hours — Every week, in real time. Calendar, timesheet app, or diary
- Collect your receipts — Bills, invoices, depreciation schedules (actual cost only)
- Calculate your deduction — Use Velofy's Tax Advisor for an instant, ATO-accurate result
- Lodge on time — for 2025–26 returns, 31 October 2026 if you lodge yourself (a Saturday, so Monday 2 November counts), or usually 15 May 2027 if you're on a registered tax agent's list by then. Missed it? Lodge as soon as you can
Enter your income and WFH hours into Velofy's Tax Advisor — free, no account needed.
Am I Claiming Enough WFH? Check → Free · No account needed · ATO 2025–26 rulesWork-related ergonomic chairs are deductible for the work-use share (items over $300 are depreciated over their effective life). Look for lumbar support, adjustable armrests, and breathable mesh.
Shop on Amazon AU →A dedicated work monitor is deductible based on work-use percentage. Items over $300 are depreciated over their ATO effective life. Essential for anyone with a dual-screen setup.
Shop on Amazon AU →A standing desk or converter used solely for work is deductible. Items under $300 — immediate deduction. Over $300 — depreciate over the ATO effective life.
Shop on Amazon AU →Complete WFH Deduction Reference: 22 Items Ranked by Dollar Value
Here are 22 deductions Australian work-from-home professionals can legitimately claim — ranked by typical dollar value at a representative $90,000 hybrid-worker income (30% tax rate + 2% Medicare levy = 32% for 2025–26 and 2026–27). Fixed-rate items (70¢/hr) are bundled into one line; asset depreciation is still separately claimable on top of either method.
| Deduction item | Typical $ | ATO label | $ saved @ 32% | Notes |
|---|---|---|---|---|
| Method choice (pick one — cannot combine) | ||||
| Fixed-rate 70¢/hr × WFH hours | $700 | D5 | $224 | 1,000 hrs typical hybrid; covers electricity + gas + internet + phone + stationery + consumables |
| Actual-cost method (alternative) | $1,200 | D5 | $384 | Worth it for heavy users — claim actual % of internet $720 + electricity $480 + gas + phone separately |
| Asset depreciation (claimable WITH either method above) | ||||
| Laptop (60% work-use × annual depreciation) | $600 | D5 | $192 | e.g., $2,000 laptop over its 2-year effective life × 60% work use = $600 a year |
| Office chair (ergonomic, work-portion) | $300 | D5 | $96 | If <$300 = instant deduction; if >$300 depreciate over effective life |
| Monitor (work-use portion) | $280 | D5 | $90 | 80% work-use × $350 = $280; instant if under $300, else depreciate |
| Desk (work-use portion) | $240 | D5 | $77 | Work-use share of the year's depreciation on the desk |
| Tablet (work-use portion) | $340 | D5 | $109 | 50% work-use × $680 typical depreciation/yr |
| Headset (noise-cancelling for video calls) | $220 | D5 | $70 | Full deduction if work-only; instant deduction if <$300 |
| Webcam (work-use portion) | $120 | D5 | $38 | If <$300 = instant; usually work-only |
| External keyboard + mouse | $100 | D5 | $32 | Instant deduction if work-only |
| Standing desk converter | $220 | D5 | $70 | Work-portion; instant if <$300 |
| Software & subscriptions (work-use portion) | ||||
| Microsoft 365 / Google Workspace | $130 | D5 | $42 | Personal-business subscription; deduct work-use % |
| Specialist software (Adobe CC, AutoCAD, etc) | $540 | D5 | $173 | Annual subscription; if work-only = 100% deduction |
| VPN subscription | $90 | D5 | $29 | If used for secure work access; work-portion |
| Cloud storage (Dropbox Pro, iCloud) | $110 | D5 | $35 | Work-use % only |
| One-off small items (instant deduction, <$300) | ||||
| Desk lamp | $80 | D5 | $26 | Instant deduction if work-only |
| Power board / surge protector | $60 | D5 | $19 | For work equipment cluster |
| Document scanner | $180 | D5 | $58 | Instant if <$300; receipts essential |
| External hard drive (work files) | $110 | D5 | $35 | Work-use portion; instant if <$300 |
| Other | ||||
| Internet bill (actual cost method only — work %) | $360 | D5 | $115 | ~50% work-use × $720/yr typical NBN bill; CANNOT also claim if using fixed rate |
| Mobile phone bill (work-use portion) | $240 | D5 | $77 | Same double-dip rule as internet |
| Professional indemnity insurance (where self-funded) | $280 | D5 | $90 | e.g., contractors and consultants |
Dollar values are typical 2025-26 figures based on retailer prices and ATO published rates. Tax savings assume a 30% tax rate + 2% Medicare levy. Rules checked against the ATO Fixed Rate Method page and ATO D5 instructions.
Velofy's Tax Calculator models both methods (fixed-rate 70¢/hr vs actual-cost) and shows you which gives the bigger return, at 2025–26 tax rates. Plus all asset depreciation on top.
Calculate My WFH Deductions → Free · ATO 2025–26 · No signupFrequently Asked Questions
Can I claim work from home expenses without receipts in Australia?
Yes, for running costs, if you use the fixed rate of 70c an hour: you don't need receipts for electricity, internet and the like. You do need a record of the actual hours you worked from home across the whole year. A sample period, such as a four-week diary, isn't accepted any more.
How much can I claim for working from home in 2025–26?
70 cents for every hour you work from home, using the fixed rate. For someone working from home full time, that usually comes to $1,000 to $1,300 a year. The actual-cost method can give more if you have high power bills and a dedicated home office.
Can I claim rent or mortgage repayments as a work-from-home employee?
No. Employees can't claim rent, mortgage repayments, council rates or home insurance for working from home. Only people genuinely running a business from home can claim those costs.
What records do I need to claim work-from-home expenses with the ATO?
For the fixed rate: a record of the actual hours you worked from home for the whole year. For the actual-cost method: the floor area of your work space, 12 months of power and internet bills, receipts for equipment, and how you worked out depreciation.
What is the WFH fixed rate for 2025–26 and 2026–27?
70 cents an hour for 2025–26, the same as for 2024–25. The ATO hasn't yet confirmed the rate for 2026–27. From 2026–27 you can also choose a $1,000 standard deduction for work-related expenses instead of listing your actual work expenses.