Work From Home Tax Deductions Calculator

Fixed-rate method: what 70¢ per hour actually covers

The fixed rate method under PCG 2023/1 (revised 14 February 2024) bundles five running-cost categories into a single 70¢-per-hour deduction. From 1 July 2024 onwards, every hour you can substantiate as time spent on income-producing activities at home produces 70¢ of deduction. The earlier 67¢ rate (FY 2022-23 and 2023-24) and the older 52¢ rate (pre-2022) are no longer in force.

The biggest behavioural change from the old "shortcut" 80¢ method (COVID-era, expired 30 June 2022) is the record-keeping standard. Under PCG 2023/1 the ATO requires actual hours for the full year — diary entries, timesheets, roster screenshots, or time-tracking app exports. A 4-week sample diary, which was acceptable under the shortcut, no longer satisfies fixed-rate substantiation.

You also need at least one bill for each expense type the rate covers, kept for 5 years — this is how the ATO confirms you actually incurred costs rather than claiming hours alone. It does not need to be every bill; one electricity bill, one internet bill, etc. is sufficient.

Actual-cost method: when the dollar amount is larger

The actual-cost method claims the work-related portion of each running cost separately. The trade-off is paperwork: you need annual bills for every expense, a 4-week representative diary to set the work-use percentage, and a year-long hours record. In return the dollar amount is usually larger if you work from home heavily and run high household utility bills.

The work-use percentage usually sits between 10% and 50% for most employees. A typical case: 25 WFH hours per week out of ~60 total household active-use hours per week ≈ 42% work-use on electricity. Internet and phone often run higher (50-80%) because background work tasks consume bandwidth even outside formal work hours. Stationery is the exception — it's 100% work-use when used solely for work, so you can claim the full amount.

Occupancy expenses (rent, mortgage interest, council rates, building insurance) are a separate carve-out. Per TR 93/30, employees can only claim these when the home is a genuine place of business — i.e. you have a dedicated work area used exclusively for income production, you don't have alternative office space available, and you can demonstrate clients or business associates would expect to find you there. Most salaried employees fail this test. Claiming occupancy also exposes the relevant floor area to partial CGT when you sell your home — a deliberate trade-off, not a free lunch.

You pick one method per income year. You cannot mix fixed-rate hours with actual-cost bills, and you cannot switch methods part-way. The calculator's "Compare with Actual-Cost Method" toggle exists so you can see which method produces the larger deduction before you lock in a choice.

Office equipment: separate from the running-cost rate

Depreciation of office equipment is claimable on top of either the fixed-rate or actual-cost method. The mechanics depend on the cost of the item: a $250 desk chair is treated very differently from a $2,000 standing desk.

Diminishing value front-loads the deduction (more in early years), prime cost spreads it evenly. Once chosen for an asset, the method cannot be changed. For a $1,500 laptop with 90% work use, diminishing-value Year 1 deduction = $1,500 × 90% × 100% = $1,350 (but capped at the work-use cost base, so the full $1,350 in year 1, $0 thereafter for a 2-year effective life with DV). Prime cost on the same asset: $1,500 × 90% × 50% = $675 per year for 2 years.

Work-use percentage applies to every asset claim — a $1,200 desk used 30% for work claims depreciation on $360 of base, not the full $1,200. Be honest with the percentage; the ATO can request your rationale during review.

Worked example: which method wins?

Same employee, same hours, two methods. The dollar gap shows why the "Compare with Actual-Cost Method" toggle exists.

In this scenario actual-cost wins by $597 in tax saved — but it requires a 4-week work-use diary covering each appliance category, every relevant bill for the year, and receipts for stationery and consumables. The fixed-rate alternative needs only hours and one bill per category.

Tipping point heuristic: if your combined annual electricity + gas + internet + phone < $3,500 and you work less than 3 days a week from home, the fixed-rate's simplicity usually beats actual-cost's higher dollar amount once you factor in the time cost of bookkeeping. Above $5,000 of combined bills with 3+ WFH days a week, actual-cost typically wins by enough to justify the extra paperwork.

Records the ATO actually wants to see

The ATO's standard retention period is 5 years from the date you lodge your return. WFH claims are an active audit focus — the ATO has flagged WFH on its annual focus areas list for the last three years, so the records standard is enforced, not just stated.

Estimates do not survive audit. "I worked about 25 hours a week from home" is not a valid record under PCG 2023/1 — the ATO has specifically called this out as a non-compliant practice. Build the hours record as you go using calendar entries or a daily timesheet app; reconstructing it at the end of the year is both painful and often inadmissible.