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As a result of the change caused by Covid of many more employees working from home, the ATO has revised the rules for the rate method, for working from home expenses that can be claimed on your tax return.

From the 2023 tax year you can claim 67 cents per hour worked from home. (Previously it was 52 cents per hour) for 2025 it is 70 cents per hour.

The big change is that you do NOT need a dedicated home office or work area but you do need to keep actual records per day of the start times and end times of when you worked at home without anybody else using the same area at the same time.

The 70 cents covers the expenses of the following items:

  • electricity and gas for lighting, heating, cooling and electronic items used while working from home;
  • internet expenses
  • mobile and home telephone expenses, and
  • stationery and computer consumables.

The only additional expenses you can add to this, is depreciation of furniture and equipment and cleaning expenses if you have a dedicated home office.

If you purchase a capital item for under $300, this can be claimed in full but is reduced for the private portion use percentage.

Just checking emails or other minor actions is not defined as working from home.

The person claiming the expense in their tax return must have actually paid for the utilities, telephone and asset expense being claimed. 

The other option to claim home office expenses which has not changed is the actual expense method. This method requires more time and calculations to maintain records. Below are details of how to use the actual method.

How it works

Using the actual costs method, you work out your deduction by calculating the actual additional expenses you incur when working from home. This includes expenses you incur for:

  • the decline in value of depreciating assets – for example, home office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices.
  • electricity and gas (energy expenses) for heating, cooling and lighting
  • home and mobile phone and internet expenses
  • stationery and computer consumables, such as printer ink and paper
  • cleaning your dedicated home office.

Where you incur running expenses for both private and work purposes, you need to apportion your deduction. You can only claim the work-related portion as a deduction.

Decline in value of depreciating assets

If the item cost $300 or less and you use it mainly for a work-related purpose, you can claim an immediate deduction for its cost in the year you buy it.

You can claim a deduction for the decline in value of depreciating assets over the effective life of the item, if it either:

  • cost more than $300
  • forms part of a set that together cost more than $300.

You may choose to work out the decline in value of low-cost assets and low-value assets with a cost or opening adjustable value of less than $1,000 through a low-value pool. You calculate decline in value of depreciating assets in a low-value pool using a diminishing value rate.

If you use the asset for work and private purposes, you can only claim the work-related portion of the decline in value as a deduction.

For example, if you buy a device for $289 that you use 80% of the time for work-related purposes and 20% of the time for private purposes, you can only claim a deduction of $231 (80% × $289) in the income year you buy it.

Cleaning expenses

If you have a dedicated home office, work out the cost of your cleaning expenses and apportion your claim for any:

  • private use of your home office
  • use of the home office by other members of your household.

For example, if you have a room set up as a home office, add together your receipts for cleaning expenses and multiply by the floor area of the dedicated work area, divided by the whole floor area of the house. Then reduce this amount by the percentage of private use by yourself and the use of the home office by other household members.

Electricity and gas for heating, cooling and lighting

Work out the cost of your electricity and gas (energy expenses) for heating, cooling and lighting by using the:

  • cost per unit of power you use (your utility bill has this information)
  • average units you use per hour, which is the power consumption per kilowatt hour for each appliance, equipment or light used
  • total annual hours used for work-related purposes by checking your record of hours worked or your diary.

Example: electricity for cooling and heating

Ben works at home several days per week and keeps a record of the total hours he works from home. His record shows he worked a total of 768 hours from home in 2022–23.

When he works from home, Ben sits in a separate room of his house and always uses the air conditioner in the room when he is working. His air conditioning unit is a small with a 3.5 kilowatt (kw) capacity. Based on the unit’s energy efficiency rating, the unit costs Ben 1.09 kw per hour to run.

Based on his electricity bills, Ben pays 27.81 cents per kilowatt hour for electricity.

Ben calculates the cost of cooling and heating for the room he uses when he is working from home as:

1.09 kw per hour × 27.81 cents per hour = 30.31 cents per kw hour

768 hours × 30.31 cents = $233 (rounded up to the nearest whole dollar).

Phone, data and internet

If you receive an itemised phone or internet bill, you need to work out your work-related use over a continuous 4-week period. You can use your work-related percentage for the 4-week period to work out your expenses for the whole income year.

For example, you can mark your work-related calls on your monthly phone bill and work out your work-related use based on the number of those phone calls compared to your total calls.

Stationery and computer consumables

Work out the cost of computer consumables and stationery by using receipts for the items you buy. If you use the item for both private and work-related purposes, you can only claim the work-related portion of the expense.

 

To help you work out your actual home office expenses you can use this ATO calculator by clicking this link. ATO Home Office Calculator.

Should you have any questions specific to your situation, contact us at questions@accoladeaccounting.com.au