Tax Deductions for Remote Workers in Australia (2025-26 Guide)
Published by SWIFT ACCOUNTANTS PTY LTD · Last reviewed
If you work from home, the ATO allows you to claim a deduction for the additional costs you incur. Since 1 July 2022, the revised fixed rate of 67 cents per hour has applied, covering electricity, internet, phone, and stationery in a single calculation. But the rules around what can and cannot be claimed — and what records you must keep — are frequently misunderstood. This guide sets out exactly what applies for the 2025-26 tax year.
The Two Methods for Claiming Working From Home Deductions
The ATO offers two methods for calculating working from home deductions. You must choose one method for a given income year — you cannot mix and match expenses between methods.
Revised Fixed Rate Method
67c / hour
- No individual receipts for covered expenses
- Must log actual WFH hours throughout the year
- Covers: electricity, gas, internet, phone, stationery
- Assets (laptop, desk, chair) claimed separately via depreciation
Actual Cost Method
Precise calculation
- Receipts required for all claimed expenses
- Must calculate work-use proportion of each expense
- Can produce a higher deduction if real costs exceed 67c/hr
- More time-intensive record-keeping required
For the majority of salaried employees, the revised fixed rate method is simpler and often produces a comparable result. The actual cost method is most advantageous for employees with very high home running costs — for example, those with large electricity bills due to running computing equipment, or those on expensive dedicated business internet plans.
The Revised Fixed Rate: 67 Cents Per Hour
The revised fixed rate of 67 cents per hour has applied from 1 July 2022, replacing the previous 52 cents per hour shortcut method that was introduced during the COVID-19 pandemic. It covers the following expenses in a single bundled calculation:
- Electricity and gas costs for heating, cooling, and lighting the work area
- The work-use portion of your internet connection (home broadband or mobile data)
- The work-use portion of phone calls and mobile plans
- Stationery, printer paper, and printer ink or toner cartridges
These expenses are considered covered by the rate and cannot be claimed separately. What is not covered by the 67 cent rate — and must be claimed separately — includes:
- The decline in value (depreciation) of laptops, desktop computers, and tablets
- The decline in value of office furniture such as desks, office chairs, and bookshelves
- The decline in value of equipment such as monitors, keyboards, webcams, and headsets
- Occupancy expenses such as rent, mortgage interest, or council rates (generally not deductible for employees)
The ATO's guidance on working from home expenses is available at ato.gov.au — Working From Home Expenses.
Worked Example: Calculating Your Fixed Rate Deduction
Consider an employee who works from home 4 days per week, 40 hours per week, for 48 weeks of the year (allowing for annual leave and public holidays). The calculation is straightforward:
At a 30% marginal tax rate, this $1,286.40 deduction would reduce the tax bill by approximately $385.92. At the 37% bracket, the saving rises to $475.97. Add in a laptop depreciation claim of, say, $450 per year (based on a $1,800 laptop at 75% work use over 3 years) and the total deduction approaches $1,736, saving between $521 and $642 depending on the tax bracket.
If you work exclusively from home — for example, as a full-time remote employee — 52 weeks at 38 hours gives 1,976 hours, yielding a fixed rate deduction of $1,323.92. Remember, the ATO requires you to record these hours throughout the year, not estimate them at tax time.
Depreciation on Work Assets: What You Can Claim
Assets you purchase for work use are deductible over their effective life, regardless of which WFH method you use. The ATO sets effective lives for common items:
| Asset | ATO Effective Life | Annual Claim (at 100% work use, prime cost) |
|---|---|---|
| Laptop computer | 3 years | 33.33% of cost per year |
| Desktop computer | 4 years | 25% of cost per year |
| Monitor | 5 years | 20% of cost per year |
| Desk and office chair | 10 years | 10% of cost per year |
| Mobile phone | 3 years | 33.33% of work-use cost per year |
If an asset costs $300 or less and is used predominantly for work, it can generally be written off in full in the year of purchase rather than spread over its effective life — provided you have a receipt and genuine work use.
What You Cannot Claim
A common source of errors in work from home claims — and a frequent target of ATO audits — is claiming expenses that are not genuinely deductible. The following expenses are not deductible for employee remote workers:
- Rent or mortgage interest: occupancy costs are not deductible for employees working from home
- Coffee, tea, snacks, and meals: these are private expenses regardless of working from home
- Gym memberships and fitness subscriptions: maintaining personal health is not a work expense
- Home internet if already claimed elsewhere: the work-use proportion of internet is already covered by the 67c/hr rate
- Personal-use portion of any dual-use item: only the work proportion of items used for both personal and work purposes is deductible
- Home cleaning or maintenance costs: private expenses unrelated to earning income