Working from home is now a regular part of life for many Australians, with home offices replacing the daily commute for a growing number of professionals. While this shift brings flexibility, it also comes with critical tax implications, particularly when it’s time to claim deductions.
For the 2024–25 financial year, the ATO has introduced changes that affect how you claim work-from-home expenses, including an increased fixed-rate method and stricter record-keeping rules.
If you’ve clocked hours from your home office this year, it’s essential to understand the latest updates to make sure your tax return is accurate—and that you don’t miss out on any legitimate claims.
Is There A Minimum Number Of Hours Required?
The good news is that there is no minimum hours required to claim working from home as a tax deduction.
To claim WFH expenses, you must:
- Be genuinely working from home (not just checking emails or taking calls occasionally)
- Incur additional running costs because of working from home
- Keep records that prove these expenses
Fixed-Rate Method Rises to 70 Cents Per Hour
From 1 July 2024, the fixed rate for WFH expenses has increased to 70 cents per hour, up from 67 cents.
This rate includes common running expenses like electricity, phone and internet usage, stationery, and heating or cooling. However, it doesn’t cover depreciable assets such as desks or computers – you can still claim those separately using the depreciation rules.
New Record-Keeping Rules
The ATO now requires detailed records of your actual working hours at home across the full year. A rough estimate or sample diary won’t cut it anymore. You’ll also need at least one bill or invoice for each type of expense you’re claiming under the fixed-rate method.
If you’re claiming asset depreciation separately, make sure you keep receipts, records of work-related use, and any relevant calculations.
You Still Have Two Methods to Choose From
While the fixed-rate method is more straightforward, the actual-cost method is still available for those who may have higher expenses, such as if you’re running heating all day or using significant data. This method requires a four-week representative diary and documentation for all expenses.
Tips to Get It Right
- Choose one method for each hour worked – don’t mix and match!
- If using the fixed-rate method, maintain a full-year work log and relevant bills.
- For the actual-cost method, keep detailed records and evidence of work-related use.
The ATO is paying closer attention to WFH deductions this year, so good record-keeping is essential.
The increase to 70 cents per hour is helpful, but paired with stricter documentation rules, it’s more important than ever to be precise. If you’re unsure which method suits you best, speak with your accountant to ensure you’re maximising your deductions while staying compliant.
A Reminder About Work-Related Expenses In General
It can be tempting to try to claim everyday items as work-related expenses, especially when working from home blurs the line between personal and professional use. But it’s important to tread carefully, particularly when the risk far outweighs the reward.
For example, one client in the trades tried to claim an air fryer, microwave, two vacuum cleaners, a TV, a gaming console, and gaming accessories as tools to support their workday. While they may have been used during breaks, these are considered personal expenses and don’t meet the criteria for deductions.
In another case, a truck driver tried to claim swimwear for rest stops during long-haul trips, which was also knocked back. In a more extravagant example, a manager in the fashion industry attempted to deduct over $10,000 in luxury clothing and accessories to maintain a polished appearance at functions and events. However, because the clothing wasn’t a required uniform or specific to the job, it couldn’t be claimed.
These cases are a good reminder that just using something while working doesn’t automatically make it tax-deductible; the expense must be directly related to earning your income and backed by solid records.
