If you worked from home in 2025-26, you can claim 70 cents for every hour you did it, covering power, internet, phone and stationery. You can add the decline in value of your desk and computer on top. What you almost certainly cannot claim is rent or mortgage interest, and trying is how people get hurt.
The rate for the return you are doing now
For the 2024-25 and 2025-26 income years, the ATO’s fixed rate is 70 cents per hour worked from home. If you are lodging your 2025-26 return, that is your number.
That one rate is meant to cover all of this:
- Electricity and gas for heating, cooling and lighting
- Home and mobile internet or data
- Home and mobile phone usage
- Stationery and computer consumables, so paper and printer ink
Work 15 hours a week from home for 44 weeks and that is 660 hours, which comes to a $462 deduction. On a 30% marginal rate it puts about $139 back in your pocket. Modest, but it is yours, and it takes about two minutes if you kept the hours.
You can run your own numbers through our calculator, which also tells you whether you are entitled to the claim, which is the part that actually matters.
Ready to work out your actual figure? Our calculator gives you a quick illustration. The ATO’s own one is the tool to use for a number you will put on a return, and it handles both methods.
Two methods, and the fixed rate is not always the winner
There are exactly two ways to work this out, and most people pick the first without checking the second.
Fixed rate: 70 cents an hour
Simple. Hours times rate. You need a record of your actual hours and at least one bill for each running cost, and that is about it. It suits most people.
Actual cost: the real work related portion of each expense
You work out what each expense actually cost you and what share of it was for work. It is more effort and it needs better records, but it can be worth considerably more if you have a big power bill, a dedicated room, and a genuinely high work use share of your internet and phone.
The honest answer is that for most employees the fixed rate wins on effort. For a smaller group with a properly set up space and heavy power use, the fixed rate quietly leaves money behind every single year. If you have never compared the two, it is worth doing once.
The records are the whole ballgame
This is where claims fall over, and it is not close. To use the fixed rate you need a record of the actual hours you worked from home across the whole year. A timesheet, a roster, a diary or a spreadsheet all count. What does not count is working it out afterwards.
Estimates are not accepted. Sitting down in October and deciding it was roughly three days a week for most of the year is exactly the claim that does not survive a question, because there is nothing behind it.
If you have not been keeping hours this year, start today. A part year record kept properly is worth far more than a full year reconstructed from memory, because one of them is evidence and the other is a guess.
You also need at least one bill for each type of expense you are covering, to show you actually incurred the cost.
The double dip that gets picked up
The most common mistake we see is claiming the 70 cents an hour and then claiming the phone bill and the internet separately on top. You cannot. The rate already includes them.
The ATO’s own example is blunt about it. An engineer works 843 hours from home and claims $590. She also uses her mobile for work on days she is in the office. She gets nothing extra for those calls, because the hourly rate has already covered her phone. If she wants to claim all of her work phone use, she has to abandon the fixed rate entirely and go to the actual cost method.
What you can claim on top of the fixed rate is the gear itself:
- The decline in value of your desk, chair, monitor, computer and bookshelves
- Repairs and maintenance to those items
- Cleaning, if you have a genuine dedicated home office. This one gets missed constantly, because people assume the hourly rate swallows it. It does not.
- Anything costing $300 or less that is mainly for work, so keyboards, a mouse, a desk lamp, a power board. You still take out any private use, and the instant write off can be lost where items form a set or are substantially identical and together come to more than $300.
What you can never claim: coffee, tea, milk and general household items, even though your employer puts them in the office kitchen for nothing. Nor anything your employer gave you or paid you back for.
Rent and mortgage interest: the ATO wrote its example about Albury
Occupancy expenses are the costs of having the home at all: mortgage interest, rent, council and water rates, land tax and house insurance. The ATO’s position on employees claiming them is one line long.
As an employee working from home, generally: you can’t claim occupancy expenses; you can claim running expenses.
To get them, the area has to have the character of a genuine place of business, and all three of these have to be true at once. The nature of your work has to require a place of business. It has to have been necessary to work from home because your employer gives you nowhere else. And the area has to be used exclusively or almost exclusively for work.
Here is the part that is oddly specific to us. The ATO’s published example of an employee who cannot claim occupancy expenses is a salesperson called Priya who lives in Albury, covers the southern New South Wales region, and is promoted into a role based at her employer’s Geelong office. Her employer is flexible and lets her keep working from her Albury home.
She cannot claim occupancy expenses, because her employer provides an office. In the ATO’s words, it is Priya’s personal choice to live in Albury.
If you have moved out this way and kept a job based in Melbourne or Sydney, that example is about you. The running expenses are still yours. The mortgage interest is not.
What the Full Federal Court said in 2026
If you were going to argue the point, 2026 was a bad year for it.
A producer at the ABC claimed $5,878.87 of the rent on his flat, plus $1,148.40 of car expenses. His facts were about as strong as they come. Victorian lockdowns and his employer’s own directions meant he had no choice about working from home. He had moved to Melbourne and rented a two bedroom flat so the second bedroom could be his workplace, and he used that room exclusively for work.
The Tribunal allowed both claims in full. The ATO appealed, and in April 2026 the Full Federal Court took them back.
The reasoning is the useful bit. The Court accepted he used the room exclusively for work, and accepted the expense was connected to earning his income. It still said no, because the essential character of rent is putting a roof over your head. Applying long standing High Court authority, it held that a home office ordinarily stays part of the home and does not become business premises just because it is used regularly, or even necessarily, for work. That makes it private, and private expenditure does not become deductible just because your employer required you to work from home. The Court also rejected the way the Tribunal had carved his rent up, treating it as one bedroom’s worth of rent plus separate extra rent. That does not mean rent can never be apportioned. Where part of a home genuinely is business premises, apportionment still works. It means you cannot manufacture a business share out of an ordinary domestic rent payment.
He lost the car claim in the same case. He did his editing work at home, then drove to the studios to do a different job. Because those were two separate activities rather than one continuous one, he was travelling to work, not on work.
The short version: being told to work from home does not get you occupancy expenses. If a taxpayer with lockdowns, a dedicated room and no choice at all could not win, an ordinary work from home arrangement is not going to.
The bit that can cost more than the deduction ever paid
Your home is normally exempt from capital gains tax when you sell it. Having part of it qualify as a place of business puts a permanent hole in that exemption. The ATO puts it in one sentence, and it is the most useful sentence on this whole subject.
If you acquired your home after 20 September 1985 and you are eligible to claim occupancy expenses, there are capital gains tax (CGT) implications for your home. There are no CGT implications if you only claim running expenses.
The word carrying the weight there is eligible, and this is the thing people get backwards. The exposure does not come from deciding to put the deduction in your return. It comes from the facts: if part of your home genuinely has the character of a place of business, you are eligible, and the capital gains consequences follow from that.
Quietly not claiming does not put the exemption back. You would be giving up the deduction and keeping the exposure, which is the worst of both. Running expenses are the safe half, and they stay safe.
How much is affected depends on the floor area and on how long it was used that way, so it is worked out across your period of ownership rather than as a flat slice of the whole gain. The ATO’s example is someone using 10% of her floor area exclusively for business. When she sells, 90% of that gain is exempt and 10% is not.
You also have to keep the records for the whole time you own the house and for five years after you sell it.
This is why we would much rather you rang us before setting a room aside as a place of business than after. It is very easy to win a small amount now and hand back a much larger amount in a decade, and by then nothing can be undone.
The audit trap almost nobody sees coming
Your working from home records and your car logbook get read against each other.
One of the inconsistencies the ATO specifically looks for is a logbook showing a significant work trip on a day when your own working from home records say you were home all day. Each claim looks perfectly fine on its own. Together they contradict each other, and it is the logbook that loses, along with a fair bit of your credibility on everything else in the return.
The other flags are the ordinary ones: no record of hours, phone and internet claimed twice, and a claim for a room that turns out to be the spare bedroom the in-laws sleep in at Christmas. Working from home deductions are a stated ATO focus area, which does not mean a fair claim is risky. It means the ones that stand out get a look, and the ones that fall over are nearly always missing the same two things.
If you run your business from home, this is a different set of rules
Everything above is written for employees. If you are a sole trader or in a partnership and the house is where the business actually operates, the running expenses work in a similar way, but the occupancy and capital gains side is genuinely different and the stakes are higher. A real home based business is far more likely to qualify for occupancy expenses, and that is exactly what puts your main residence exemption at risk.
We have written that up separately in running your business from home, and what it does to your capital gains tax.
What to do next
You do the sum, not us. The ATO built the calculator and it is the one that produces a figure you can put on a return. All we need back is the answer.
Add up your hours
From your diary, roster, timesheet or spreadsheet. The actual hours you worked from home across the year, not an estimate.
Put them through the ATO calculator
It asks the questions this page cannot, and it handles both methods. Free, and a few minutes.
Send us the result
Email the figure to [email protected] with the rest of your tax return paperwork, and we will take it from there.
Stuck on whether you can claim it at all?
The calculator works out the number. It cannot tell you whether the room counts, or whether claiming against the mortgage will cost you when you sell. That part is worth a phone call, and it is a short one.
Level 1, 561 Olive Street, Albury NSW 2640. Registered Tax Agent 20651000.
Sources: the ATO’s guidance on working from home expenses, the fixed rate method, and occupancy expenses for employees, all checked on 9 September 2026. The 70 cent rate applies to the 2024-25 and 2025-26 income years. The court decision referred to is Commissioner of Taxation v Hall [2026] FCAFC 43, judgment 10 April 2026 before Thawley, McElwaine and Wheatley JJ, in which the Full Federal Court allowed the Commissioner’s appeal and set aside the Tribunal’s decision in Hall and Commissioner of Taxation [2025] ARTA 600. The claim amounts and the reasoning summarised here are taken from the ATO’s decision impact statement on the case, published 17 June 2026. This is general information and not advice about your circumstances.
If you are a teacher, the home office rules sit alongside a longer list of claims that catch people out. We have covered those in teacher tax deductions, what holds up and what gets knocked back.
