Claiming work from home expenses on tax? Here are the rules

Man working from home. He is writing in a diary while in a video meeting with his colleagues

The Australian Taxation Office (ATO) revealed new rules for claiming work from home (WFH) deductions in 2023.

The changes include a revision of the fixed rate deductions method, changes to eligibility requirements, changes to how you claim work from home assets like your computer (including repairs and maintenance), and a big change to record-keeping requirements.

Be sure to check your eligibility for different work-from-home calculation methods with the ATO.

You can read on to learn about these different methods.

Changes to the fixed rate method for calculating WFH deductions

The main change is to the ‘fixed rate’ method of claiming your working-from-home expenses – one of two methods you can use to calculate the portion of your expenses that come from your employment activity, for example, part of your home electricity bill. 

There are no changes to the ‘actual cost’ method.

The revised fixed rate method has seen an increase in the amount you can claim as a deduction from 52 cents to 67 cents per work hour. 

The new fixed rate covers the running costs of your work from activity. 

Deductions can be made for energy expenses (that’s your electricity and gas bill), home and mobile phone usage costs, internet bills, stationery, and ‘computer consumables’ (better known as things like printer paper and ink, to us human beings). 

Aussies will no longer need to have a dedicated home office in order to claim work from home expenses. That could mean it just got easier for a portion of working Australians that are now able to calculate their WFH expenses in a simpler way than before. 

The ATO says these changes are being made to “better reflect contemporary working from home arrangements” for Australians. 

Assistant Commissioner, Tim Loh, also says the other changes could simplify deductions on harder-to-calculate expenses like phone, internet, and energy bills. 

“Items that are difficult and tedious for everyday Aussies to calculate actual work-use, like phone, internet and electricity expenses, are included in the revised rate,” he said.

These expenses need to be claimed altogether. So, the tax deduction you receive will be for the combined value of your electricity, internet, and phone bill, for example.

Changes to how you claim WFH assets (computers, office furniture)

Assets and equipment that typically give taxpayers a bigger deduction, including technological items and office furniture, aren’t included in the revised rate and need to be claimed separately, according to Loh. 

Australians will be able to claim the decline in value of their WFH-related assets, repair or maintenance costs, and also any costs associated with cleaning their home office.

Any assets of equipment Australians buy for work purposes over the value of $300 can’t be claimed in one go. This means that you’ll have to claim the deduction over multiple years, as it declines in value (depreciates). 

To work out how your assets decline in value, the ATO has a depreciation calculator. You can also use the ATO app’s myDeductions tool to keep track of all of your work-related expenses.

Changes to the way Australians keep tax records for fixed rate WFH expenses

While the ATO has simplified the fixed rate method, it’s not all a walk in the park for the taxpayer. 

Australians claiming work from home expenses will need to keep a record of all the hours they’ve worked from home for the entire financial year. 

These records can be in ‘any form’, according to the ATO’s website. But, before you decide to go out and begin your cave painting timesheet, note that the ATO requires you to record these hours as they occur. 

Some examples of ways to record your WFH hours, according to the ATO, include: 

  • Timesheets 
  • Rosters
  • Logs of time spent accessing employer or business systems 
  • A diary for the full year. 

If you plan to claim a portion of your home electricity, phone, and internet bills, you’ll also need to keep a copy of these bills on hand. They’ll be used as your evidence when it comes to claiming deductions at tax time.

If you’re looking for more help with your money, why not check out our Family Finances hub? Tax time can also see many people consolidating their debts and one way to do this is through a personal loan. Take a look at our Personal Loans hub to see some of the best debt consolidation loans on the market.