Work-From-Home Deductions for the Self-Employed (FY2025–26)
Fixed-rate vs actual-cost — which one gets you the bigger refund, and the records the ATO now demands
If you run your business or freelance from home, you're entitled to claim the extra costs of doing so — but how you claim makes a real difference to your refund, and the ATO has tightened the records it expects.
Here are both methods, side by side, so you can pick the one that actually pays you more.
General information only, not personal tax advice. Verify the current cents-per-hour rate and record rules with the ATO (ato.gov.au) before lodging.
Who can claim — and what counts
You can claim if you genuinely work from home and incur extra running costs as a result. "Running costs" means the incremental expense of working there — electricity and gas for heating/cooling and lighting, internet and phone, and the decline in value of office furniture and equipment. Simply checking emails occasionally from the couch generally won't cut it; you need to be genuinely carrying out work.
Method 1 — The fixed-rate method
You claim a set rate for every hour you work from home (verify the current cents-per-hour figure). This single rate is designed to bundle together energy, internet, phone and stationery — so you generally can't claim those separately on top. You can still separately claim the decline in value of bigger assets like a desk, chair or computer.
The catch (and it's important): the ATO now requires a record of the actual hours you worked from home across the year — a timesheet, diary or roster — not a 4-week estimate. Keep that log as you go.
Example: work from home 30 hours a week for 48 weeks = 1,440 hours. Multiply by the current rate to get your deduction. Simple, low-evidence, predictable.
Method 2 — The actual-cost method
You claim the actual work-related portion of each running cost. That means working out the business-use percentage of your electricity, internet and phone (often based on floor area for a dedicated room, and time-use for shared costs), keeping every bill, and claiming depreciation on equipment.
This is more work, but if you have a dedicated home office and high power/internet use, it can produce a noticeably bigger deduction than the fixed rate.
Which should you use?
- Fixed rate — best if you want simplicity and don't have a dedicated office. Just log your hours.
- Actual cost — best if you have a dedicated room, work long hours from home, and have high bills. Worth the extra paperwork.
You can work out both and use whichever is higher — just keep the records that support the method you choose.
Mistakes to avoid
- Estimating hours. The ATO wants a real record of actual hours — reconstructed guesses are a red flag.
- Double-dipping. Under the fixed rate you can't also claim internet/phone separately — they're already in the rate.
- Claiming occupancy costs as an employee. Rent, mortgage interest and rates are generally only relevant in limited business circumstances — and claiming them can affect your main-residence CGT exemption. Get advice first.
How TaxBot helps
TaxBot keeps your home-office hours and your power, internet and phone bills in one place, calculates your work-use percentages, and shows you which method gives the bigger deduction — so you don't leave money on the table or fall short on records.