WFH expenses · 2025-26 financial year
Working from home: 67c per hour vs the actual-cost method
Which method gives you the bigger deduction, what records the ATO actually requires in 2025-26, and a fully worked example for a $90,000 PAYG earner spending three days a week at home.
★Key takeaways
- ✓Two methods for 2025-26: fixed-rate at 67c per hour worked from home, or actual-cost (work-use share of every line item).
- ✓Fixed-rate (67c/hour) covers electricity, gas, home internet, mobile and home phone, stationery and consumables. Furniture and tech depreciation are claimed separately.
- ✓Records: you need a full-year contemporaneous diary/timesheet/roster of actual hours WFH. Representative 4-week samples are not accepted from 1 March 2023 onward.
- ✓For a $90,000 PAYG earner doing 3 days WFH (~960 hours/year), the 67c rate yields ~$643 of deductions plus separate equipment depreciation. Tax saved ~$193 at the 30% marginal rate.
- ✓Actual-cost method is more work but can be materially better if you have a dedicated office, high power usage (multiple monitors, EV charging on a peak tariff) or run a side business from home.
- ✓Don’t double-dip. If you use the 67c rate, you cannot also claim mobile or internet separately.
Side-by-side
Two methods, one decision
| Category | Fixed-rate (67c/hour) | Actual-cost |
|---|---|---|
| Electricity + gas | Included in 67c rate | Work-use % of bill (apportion by hours + appliances used) |
| Home internet | Included | Work-use % of bill (4-week diary) |
| Mobile phone | Included | Work-use % of bill (4-week diary) |
| Stationery + consumables | Included | Receipts |
| Office furniture (desk, chair) | Claimed separately | Claimed separately |
| Computer + tech equipment | Claimed separately (depreciation) | Claimed separately (depreciation) |
| Professional subscriptions | Claimed separately | Claimed separately |
| Records of hours | Mandatory full-year diary/timesheet | Mandatory + apportionment workings |
Source: PCG 2023/1 and the ATO working from home expenses page.
Worked example
Alex, $90,000 PAYG, 3 days WFH
Alex is on a $90,000 salary, marginal tax rate 30%. They work 3 days a week from home (roughly 8 hours per day × 40 weeks of work, allowing for leave + public holidays). Total WFH hours ≈ 960 a year. They have a normal home setup: one monitor, a laptop, a desk and a chair bought two years ago for $850 combined.
Fixed-rate method
$643 + separate depreciation
| 960 hours × $0.67 | $643 |
| Depreciation – desk + chair ($850 × 80% work × 20%/yr DV) | $136 |
| Depreciation – external monitor ($350 × 100% work × 33%/yr DV) | $116 |
| Total WFH-related deduction | $895 |
| Tax saved at 30% marginal rate | $269 |
Records needed: Alex’s Outlook calendar exported as a CSV, showing the days worked from home, plus a one-line note on most days describing remote work. Plus receipts for the desk, chair and monitor.
Actual-cost method
~$1,170 + separate depreciation
| Electricity (3,200 kWh × $0.32/kWh × 35% work use) | $358 |
| Home internet ($95/mo × 12 × 50% work use) | $570 |
| Mobile ($65/mo × 12 × 30% work use, after employer phone) | $234 |
| Stationery + consumables (receipts) | $84 |
| Depreciation – desk + chair + monitor (as above) | $252 |
| Total WFH-related deduction | $1,498 |
| Tax saved at 30% marginal rate | $449 |
Records needed: full-year hours diary, all electricity bills, 4-week internet usage diary, 4-week mobile usage diary, every stationery receipt, depreciation schedule. About 2-3 hours of extra admin a year.
For Alex, the actual-cost method yields about $180 more in tax saved. Whether that’s worth 2-3 hours of extra admin is a personal call. For most casual WFH employees, the fixed-rate method wins on time-value. For heavy WFH users with high power consumption (multiple monitors, EV on a home charger, gaming rig) or a small-business side hustle from home, the actual-cost method usually pays.
Records the ATO actually wants
What “contemporaneous” means in practice
From 1 March 2023 onward, the ATO requires a record of actual hours worked from home for the entire year. A representative 4-week sample multiplied out is no longer acceptable. Practical options that work:
- Calendar with WFH days marked – the simplest. An Outlook/Google calendar where every WFH day has a recurring entry. Export to CSV at year-end.
- Employer-managed roster – if your employer tracks hybrid days, ask for a print of your annual schedule.
- Timesheet software – Harvest, Toggl, Hubstaff and similar all export a log. Export, save, store.
- A simple spreadsheet – date + hours WFH + a brief description. Fill in daily or weekly. Three minutes a week.
The ATO won’t accept a “I usually do 3 days a week” narrative. Make the record. It’s the single biggest WFH audit trigger.
Watch-outs
Common WFH claim errors
- Double-counting internet or mobile when using the 67c fixed-rate method.
- Claiming weekends, public holidays or leave days as WFH hours.
- Claiming a share of mortgage interest, rent or rates without a genuine “place of business” – attracts CGT exposure on sale.
- Using a 4-week representative sample (no longer accepted from 1/3/2023).
- Claiming an employer-provided laptop or monitor – you don’t own it, no depreciation deduction available.
- Forgetting to apportion phone or internet for private use.
When actual-cost wins by a clear margin
High-power, dedicated-office scenarios
- Dedicated home office room with no private use, running 5+ days a week.
- Heavy electricity use: multiple monitors, dual workstations, server, video rendering, EV charged at home on peak tariff.
- Solo-occupant household where ALL household power is essentially work-related during business hours.
- Side business or consulting from home – work-use percentages on bills go materially higher.
- NBN plan upgraded specifically for video calls – arguably 100% work-related on the upgrade portion.
Common questions
WFH deduction – common questions
Can I just estimate my WFH hours?
No. From 1 March 2023, the ATO requires a contemporaneous record of actual hours worked from home – a diary, timesheet, roster, calendar entries or similar. A representative 4-week sample is no longer acceptable. You need the full-year record. If you don’t have one, the actual-cost method (with apportioned bills) is your only path.
Is there a dedicated home office requirement?
No. You don’t need a separate room to claim the 67c/hour fixed-rate method. The previous “occupancy” regime that required a dedicated home office is mostly relevant only if you’re claiming a share of mortgage interest, rent or council rates – which is rarely worth doing because it crystallises a capital gains tax issue when you sell.
Does WFH include hours worked from a cafe or hotel room?
No. Only hours worked at your home count. Other remote-work locations don’t qualify for the fixed-rate method. Travel between workplaces is separately deductible under the motor vehicle / travel rules.
Can I claim mortgage interest as a WFH expense?
Only in narrow cases. If your home is a “place of business” (you see clients there, you have a separate dedicated workspace with no private use, signage etc), you may be able to claim a proportion of occupancy expenses. This is rare for employees. It also triggers a partial loss of the main residence CGT exemption when you sell – usually not worth it.
What if I share my home with someone who also works from home?
Each person tracks their own hours and claims independently. The 67c/hour rate is per person, so a couple both WFH 3 days a week can each claim. If you use the actual-cost method, apportion shared bills by usage – not by an arbitrary 50/50 split.
Can I claim a new desk or chair?
Yes. Office furniture is depreciable. Items costing $300 or less (work-use portion): immediate deduction. Over $300: depreciated over effective life. Furniture isn’t included in the 67c/hour fixed rate, so you can claim it separately under either method.
What does my employer reimbursing some costs do?
You can’t deduct what your employer reimburses. If they pay an allowance (taxable income), you can still claim the actual expense against it. If they provide equipment for you to use at home, you can’t claim depreciation – you don’t own the asset.