If you work from home regularly and want to claim these expenses, you need to keep certain records. We look at what you need to record, two methods for claiming and share a handy template to help you.
While working from home is common in a post-COVID world, people are often uncertain how to claim these expenses on their tax return.
Claiming an allowance
If you work from home for your job regularly throughout the year, you can claim a deduction every time you do that. You must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls. To make a claim you must have incurred additional running expenses as a result of working from home.
To claim any allowance, you must have evidence recorded which clearly shows how often you worked from home.
We have produced a resource which will make recording your hours much easier. A separate record needs to be completed for every job/business.
Additional running expenses
Running expenses relate to the use of facilities within your home. These expenses are generally considered private and domestic expenses. You can claim a deduction for additional running expenses you incur as a direct result of working from home which may include:
- electricity or gas for heating/cooling and lighting
- home and mobile internet and phone expenses
- stationery and office supplies
- depreciating assets you use for work
- -eg office furniture such as chairs and desks
- -eg equipment such as computers, laptops and software
- the repairs and maintenance to depreciating assets.
In limited circumstances where you have a dedicated home office, you may also be able to claim:
- occupancy expenses (such as mortgage interest or rent)
- cleaning expenses.
If your employer pays you an allowance to cover your working from home expenses, you must include it as income in your tax return.
Two ways to claim expenses
There are two ways to claim your deduction for working from home expenses.
The first is a fixed rate method. Each year the Australian Taxation Office sets the rate that people can claim per hour.
The amount, which is currently 67 cents per work hour* covers all costs and additional running expenses. You are able to claim for other expenses not covered by the fixed rate, such as the decline in value of depreciating assets. Under this fixed rate method you don’t need a dedicated home office to claim any expenses.
The second method is called the actual cost method where you record all the actual expenses you incur as a result of working from home. You must show the additional running expenses you incurred while working from home, such as receipts, bills and other documents, as well as how you worked out the amount of your deduction.
Capital Gains Tax implications
If you used any part of your home for work/business purposes, you may have to pay Capital Gains Tax (CGT) if you sell the property in the future.
CGT won’t apply if you didn’t have an area specifically set aside for your business activities and you did not claim occupancy expenses.
If you had an area specifically set aside for your work/business activities and claimed occupancy expenses, you may be eligible to apply one or more of the small business CGT concessions to reduce your capital gain unless the main use of the house was to produce rent.You can read more on the Australian Taxation Office website or contact us for details about any potential implications or concessions available for your situation.
Good record keeping
Ultimate Tax & Advisory Managing Director Bobby Serval said good records were key for your accountant to claim office expenses.
“Individuals working from home, whether this is for one employee or a contractor working for multiple clients, can claim working from home expenses,” he said.
“By keeping good records of the hours worked at home, we can help you determine which method to claim, as well as any additional expenses such as depreciation.
“We have a Home Office Diary document available on our website to help record your hours. We encourage you to complete it each week as this will make next year’s tax time a whole lot easier!”
Find the relevant home office diary on our website https://ultimate-tax.com.au/downloads-for-individuals/
*Rate is current for 2024/25
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