Tax & Work from Home: What you need to know

Updated July 21st 2021

With work-from-home now more common than not, the ATO has kept in place these three methods for calculating your work related expenses.

The COVID-19 lockdowns have seen increasing numbers of employees required to work from home increasing their household expenditure. In recognition of this, Taxpayers are able to claim a personal tax deduction for the costs incurred while working from home.

To claim a deduction, you must have actually incurred expenditive that is directly related to earning your income, you have a record to prove the expenditure and the cost was not reimbursed by your employer. Expenses that may be included are:

  • electricity costs associated with heating, cooling and lighting;
  • cleaning costs of dedicated work area;
  • phone and internet expenses;
  • computer consumables and stationery;
  • home office equipment and electronics up to $300 (items over $300 mus be depreciated).

You cannot claim rent, mortgage costs or rates when working from home, nor the cost of tea, coffee or general household items that may have otherwise been provided by your workplace.

Calculating your expense claims can be done in 3 ways:

  • Shortcut Method – a flat 80 cents per hour you worked from home during the COVID-19 pandemic period.
  • Fixed Rate Method – 52 cents per hour you worked from home during the COVID-19 pandemic for electricity, cleaning and furniture depreciation, while claiming actual portion of work-related phone, internet and computer depreciation
  • Actual Cost Method – the actual work-related portion of all home office running expenses calculated on a reasonable basis for the period that you worked from home during the COVID-19 pandemic.

An individual is required to keep a diary of the number of dedicated hours working from home.