If you work from home in Australia in 2026–27, you can claim a tax deduction for the extra running costs — but the ATO’s rules are stricter than most people think. The fixed rate is 70 cents per hour (the latest published rate — the ATO hasn’t confirmed the 2026–27 rate yet), you can’t claim phone and internet on top of it, and if you haven’t kept an hours diary since 1 July, you’re already behind. Add in this year’s new $1,000 standard deduction, and the maths most guides show you is out of date. Here’s how both ATO methods work, with real dollar examples and the record-keeping traps that wipe out claims.
The short answer
- Fixed rate method: 70c per hour worked from home — the latest ATO-published rate (2024–25 and 2025–26; the 2026–27 rate hasn’t been announced yet). It covers electricity, gas, phone, internet, stationery and computer consumables. You can’t claim those separately on top.
- Actual cost method: claim the real work-related share of each expense, apportioned between work and private use. More paperwork, often a bigger deduction for heavy home workers.
- New for 2026–27: an optional $1,000 standard deduction for work expenses with no receipts. It’s reduced dollar-for-dollar by whatever you itemise, so a WFH claim only beats it if your total work deductions exceed $1,000.
- Employees can’t claim rent, mortgage interest or rates — occupancy expenses are only available in limited cases where your home is genuinely your place of business.
Working out what the deduction actually saves you? Run your numbers through our income tax calculator and see how a WFH deduction changes your 2026–27 tax bill.
The two ATO methods explained
There are exactly two ways to calculate your working-from-home deduction. You pick one per income year — you can’t mix them — and you can switch methods between years if your situation changes. Record-keeping is the deal-breaker for both: for the fixed rate you need a continuous record of actual hours for the whole year (estimates at year-end are rejected); for actual cost you need receipts plus your apportionment workings.
1. Fixed rate method: 70 cents per hour
Multiply the number of hours you worked from home by 70 cents. That rate is an all-in figure for your additional running costs: home and mobile internet/data, mobile and home phone usage, electricity and gas for heating, cooling and lighting, and stationery and computer consumables like printer ink and paper.
The critical rule: the rate already includes all of those expenses — you cannot claim a separate deduction for anything the rate covers. This is the trap most people fall into: claiming the 70c rate and a $400 phone bill. The ATO’s own example rejects exactly this: an engineer claimed 843 hours × 70c = $590, and was told her mobile expenses were already inside the 70c.
What you can still claim on top of the fixed rate: decline in value of depreciating assets (laptop, monitor, desk, chair, bookshelves) and repairs and maintenance of those assets. Items costing $300 or less that you use mainly for work are deducted immediately; anything over $300 is depreciated over its effective life (laptops are 4 years, so 25% per year).
You don’t need a dedicated home office to use this method — working from the kitchen table counts.
2. Actual cost method: claim the real numbers
Here you calculate the actual additional expenses you incurred and apportion each one between work and private use — electricity and gas, phone and internet, cleaning for a dedicated home office, stationery, and depreciation of furniture and equipment. Apportionment must be “fair and reasonable”: the ATO recognises floor-area splits (office m² ÷ total m²) and time-based usage percentages.
One catch straight from the ATO’s guidance: if other household members are in the same room while you work, you aren’t incurring additional lighting/heating costs for that room — so you can’t claim them. More on the ATO’s actual cost method page.
Side by side
| Fixed rate method | Actual cost method | |
|---|---|---|
| Calculation | Hours × 70c (plus depreciation claimed separately) | Each expense × work-use percentage |
| Phone/internet | Included in the 70c — can’t claim separately | Claim the work-use portion separately |
| Record-keeping | Continuous hours log for the whole year + one bill per expense type | Receipts for every expense + your apportionment workings |
| Best for | Hybrid and part-time home workers; simple claims | Full-time home workers, high utility bills, dedicated offices |
| Dedicated office needed? | No | No — but a dedicated room supports a stronger claim |
Three 2026–27 changes that rewrite the maths
Most WFH guides still describe last year’s world. Three things are different for the 2026–27 income year (the return you’ll lodge from July 2027):
1. The ATO hasn’t published the 2026–27 rate yet. The fixed-rate history: 52c (2020–21, 2021–22) → 67c (2022–23, 2023–24) → 70c (2024–25, 2025–26). No 2026–27 rate has been announced — but practically that changes nothing today: the rate is applied when you lodge, so keep logging hours now at 70c as your working figure and true up at tax time. Beware stale guides still quoting 67c or the pandemic-era 52c — check the ATO’s fixed rate method page before you lodge.
2. The new $1,000 standard deduction for work expenses. From 1 July 2026, eligible employees can choose a flat $1,000 deduction with zero receipts — or itemise actual work expenses, whichever is better. But it’s reduced dollar-for-dollar by what you claim, so you can’t take the $1,000 and your WFH claim. Your WFH deduction only saves extra tax on the amount above $1,000: the crossover under the fixed rate is $1,000 ÷ 70c ≈ 1,429 hours (roughly 3.7 days a week, full year). A hybrid worker at 2 days a week lands around $489 for the year — entirely inside the $1,000, so itemising saves them nothing extra. (Union and professional-association fees can still be claimed on top.)
3. The $50 phone/internet shortcut is dead. The old ATO shortcut that let people claim $50 a year for phone and internet with minimal records ended on 1 July 2026. If you want to claim phone or internet separately outside the fixed rate now, you need real evidence: bills, a work-use percentage, and a representative four-week usage diary where appropriate.
One more 2026–27 change affecting every dollar figure below: the bottom tax bracket dropped from 16% to 15% (worth up to $268 a year). See our 2026–27 income tax rates guide for the full brackets.
Step-by-step: calculating your fixed-rate deduction
- Total your WFH hours from your records — timesheets, rosters, a diary, or calendar entries with start and finish times, kept as you worked them. Only hours actually worked from home count.
- Multiply by 70c for your running-expenses deduction. Drop the cents at the end (disregard, don’t round).
- Add decline in value of depreciating assets — the work-use portion of laptop, desk, chair, monitor, using the ATO’s effective-life rates.
- Add any other WFH expenses the rate doesn’t cover (e.g. equipment repairs). Don’t include anything the 70c already covers.
- Add it all up, disregarding the cents — the ATO truncates rather than rounds: $1,276.90 becomes $1,276.
Three worked examples with 2026–27 figures
Example 1 — Maya, hybrid worker, fixed rate + laptop depreciation
Maya is a marketing manager in Sydney working from home 2 days a week. She logs 7.6 hours per WFH day across 44 working weeks: 7.6 × 2 × 44 = 669 hours. Fixed-rate deduction: 669 × 70c = $468.30.
Last year she bought a $1,800 laptop used 80% for work. Computers depreciate at 25% per year: $1,800 × 80% × 25% = $360. She can claim this separately because the fixed rate doesn’t cover depreciation.
Total deduction: $828 (cents disregarded). Maya earns $110,000, so her 2026–27 marginal rate is 30% + 2% Medicare = 32%. Tax saved: $828 × 32% = $265.
But here’s the 2026–27 twist: Maya’s total work deductions are well under $1,000, so the new standard deduction gives her $1,000 with no receipts — her $828 itemised claim saves nothing extra. Maya should take the standard deduction and skip the diary.
Example 2 — Daniel, full-time WFH developer, fixed rate
Daniel works from home 5 days a week: 7.6 × 5 × 48 = 1,824 hours → 1,824 × 70c = $1,276 (cents disregarded). He also claims $45 depreciation on a $450 office chair (10-year effective life). Total: $1,321.
On $150,000 his marginal rate is 37% plus 2% Medicare = 39%, so tax saved is $1,321 × 39% = $515. His itemised claim exceeds $1,000, so itemising beats the standard deduction — by ($1,321 − $1,000) × 39% = $125 extra in his pocket.
Example 3 — Priya, 3 days a week, actual cost beats fixed rate
Priya has a dedicated home office and high utility bills. She works from home 3 days a week: 7.6 × 3 × 44 = 1,003 hours → fixed rate = $702.
Under the actual cost method, her office is 12 m² of a 150 m² home (8% floor-area share):
- Electricity: $2,400 × 8% = $192
- Internet: $1,080 × 60% work use (4-week usage diary) = $648
- Mobile phone: $720 × 50% work use = $360
- Laptop depreciation: $1,500 × 80% × 25% = $300
Actual cost total: $1,500 — more than double the fixed-rate $702. The extra paperwork (every bill, usage diaries, the floor-area calculation, kept 5 years) buys her an extra $798 of deductions, worth $1,500 × 32% = $480 in tax saved on her $95,000 salary. The winner flips as hours, bills and equipment change — compare both methods every year.
Common mistakes that kill WFH claims
- Double-dipping the 70c rate. Claiming internet, phone or electricity separately on top of the fixed rate — the rate already includes them, so it’s double counting.
- Estimating hours at year-end. The ATO rejects estimated hours outright. Their Wanda example: she estimated 280 hours for eight months and was allowed zero of them — only the 136 hours she’d actually recorded counted. Start your diary today: your claim starts today.
- Quoting stale rates. 67c and 52c belong to earlier years. Several current guides still show 67c. Check the ATO page before you lodge — and note the 2026–27 rate isn’t published yet.
- Employees claiming rent or mortgage interest. Occupancy expenses are generally not deductible for employees. They’re only available where a dedicated part of your home is genuinely your place of business — a much higher bar than “I work from the spare room”. Running your business from home is a different story.
- Forgetting depreciation. The laptop, monitor, desk and chair you bought for your home office can be the biggest single component of the claim — and it’s available on top of the fixed rate.
- Rounding instead of truncating. $1,276.90 is claimed as $1,276, not $1,277 — the ATO’s own examples spell this out.
- Thinking the $1,000 standard deduction is a bonus. It’s an either/or alternative to itemising — not something you add to your WFH claim.
Tips: getting the biggest legitimate claim
- Start the diary today if you haven’t. Every day without a log is a day you can’t claim under the fixed rate. The ATO app’s myDeductions tool records WFH hours and can pre-fill myTax. Keep one bill for each expense type the rate covers to prove you incurred those costs.
- Salvage the lost months with the actual cost method. No hours diary for July–September doesn’t mean a zero claim: receipts for electricity, internet and phone still exist, and partial evidence — work calendars, meeting logs, VPN records — can support a defensible claim for the documented periods.
- Keep records for 5 years from the date you lodge.
- Photograph your home office setup — it supports both your work-use percentages and your equipment claims.
- Time sub-$300 equipment buys before 30 June. Items costing $300 or less that you use mainly for work are deducted immediately in the year you buy them — so a June purchase beats a July one.
Our tax deductions checklist covers the rest of your claim — car expenses (see our car expenses guide), uniforms, self-education and donations — so you can add up your full work-related total and decide whether the standard deduction or itemising wins.
Frequently asked questions
What is the work-from-home fixed rate for 2026–27?
The ATO hasn’t published a 2026–27 rate yet. The latest published rates are 70c/hour (2024–25, 2025–26), 67c/hour (2022–23, 2023–24) and 52c/hour (2020–21, 2021–22). Use 70c as your working figure and log your hours now — the rate is applied at lodgement. Beware guides quoting 67c or 52c as current.
Can I claim my phone and internet separately on top of the 70c?
No. The 70c rate explicitly includes home and mobile phone and internet/data expenses. Claiming them separately is double-dipping. If your phone and internet bills are high relative to your hours, use the actual cost method instead — that lets you claim the work-use percentage of each bill properly.
I haven’t kept a WFH diary since 1 July — can I still claim anything?
For the fixed rate, only hours you actually recorded count — estimated hours are rejected (see the ATO’s Wanda example). Start a diary today and claim from today forward. For months already lost, consider the actual cost method for periods you can support with bills and partial evidence like work calendars, meeting logs or VPN records — a partial-year claim rather than nothing.
Can employees claim rent, mortgage interest or council rates?
Generally no. Occupancy expenses are only deductible where a dedicated part of your home functions as your genuine place of business — running your business from a home office, for example. An employee working from the spare room for their employer can’t claim rent or mortgage interest.
Can I switch between the fixed rate and actual cost methods each year?
Yes. You choose one method for each income year — you can’t use both in the same year — and you can switch freely between years. Comparing both (plus the $1,000 standard deduction) each tax time is how you avoid leaving money on the table.
Does the new $1,000 standard deduction replace my WFH claim?
It’s an option, not a replacement. From 2026–27 you can take a flat $1,000 work-expenses deduction with no receipts, or itemise your actual work-related expenses (WFH, car, uniforms, professional development) — whichever is higher. Under $1,000, take the standard deduction and skip the paperwork. Over $1,000, itemise — but then you need records for everything.
Your move
The biggest determinant of your 2026–27 WFH deduction isn’t the method you choose — it’s whether you kept records. A full-year hours diary, one bill per expense type, and receipts for any equipment: that’s the whole system. Compare both methods (and the new $1,000 standard deduction) at tax time, don’t claim anything the 70c already covers, and run the result through our income tax calculator — a few hundred dollars of deductions is real money at any marginal rate.
