One of the most-claimed work-related expenses each year is a working from home deduction, especially in the last few years. In 2024, more than 10 million people claimed a work-related deduction, and many of those claimed a deduction related to working from home.
As such, this is a focus area for the ATO and work from home deductions will be under scrutiny.
There are two ways you can calculate your deduction for additional expenses you incur by working from home – the fixed rate method or the actual cost method.
In order to claim a working from home deduction, you must be working from home to fulfil your employment duties (not carrying out minimal tasks) and you have to have records to prove you incurred additional expenses due to working from home.
Fixed Rate Method
Using the fixed rate method allows you to claim 70 cents for every hour you work from home and covers your additional running expenses that are often difficult to apportion, like internet, phone usage, electricity and stationery.
Note: you can not then claim these items separately elsewhere in your tax return – no double dipping!
Actual Cost Method
To claim using the actual cost method, you must have records of all the expenses you claim, and the work-related use of your expenses to back up any tax deduction.
The ATO is also reminding Australians to declare all sources of income, and make sure they are included on their tax return. This includes side-hustles, for example if you are providing ride sourcing services or selling services via an app.
Each source of income you have will have different deductions available to you, depending on the nature of the income and your occupation.
For more information about Working From Home deductions, visit the ATO website or contact your Financially Sorted Accountant.