Are your Home Office Expenses Tax Deductible?

Key Tax Deductions for Remote Workers

With the rise of remote work, it’s crucial to understand what tax deductions you can claim and how to accurately calculate them. The Australian Taxation Office (ATO) has updated its guidelines to help both employees and home-based businesses navigate these deductions.

Eligible Expenses for Remote Work

You may be eligible to claim deductions for additional expenses incurred while working from home, such as electricity or gas for lighting, heating, and cooling; cleaning expenses for your home office; office supplies; phone and internet costs; and work-related equipment and furniture like computers and desks. However, personal expenses, such as coffee or children's school equipment, cannot be claimed. Similarly, you cannot claim items provided by or reimbursed by your employer, such as a work laptop.

Approaches to Calculate Deductions

There are two main methods for calculating your work-from-home expenses: the fixed-rate method and the actual cost method.

Fixed-Rate Calculation Method

Starting from the 2022-23 financial year, the fixed-rate method no longer requires you to have a dedicated home office. This method allows you to claim a flat rate per work hour for running costs, covering phone and internet usage, electricity and gas, stationery, and computer consumables. You need to keep records of your work hours and evidence of incurred expenses, such as bills.

Additionally, you can claim the work-related portion of asset depreciation, repairs, and maintenance, and cleaning costs for a dedicated home office separately.

Items costing more than $300, only the decline in value (depreciation) is claimable.For detailed information, refer to the ATO’s home-based business expenses fact sheet.

Actual Expense Calculation Method

If you prefer, you can use the actual cost method, which requires meticulous record-keeping. This method involves calculating the work-related portion of most or all of your working-from-home expenses. The ATO provides tools like the home office expenses calculator and the depreciation and capital allowances tool to assist with these calculations.

Consulting with a registered tax professional can help ensure you accurately claim all eligible expenses.

Costs and Depreciation of Equipment

For items costing $300 or less, you can claim an immediate deduction if they are solely used for work purposes. For items over $300, you must calculate their decline in value and claim the deduction over several years, considering the asset's lifespan and its work-related usage. This process can be complex, so seeking help from a registered tax professional or using the ATO’s online calculators is advisable.

Seeking Professional Tax Advice

Tax regulations can be complex, and individual circumstances vary. It’s highly recommended to consult a registered tax agent for personalised advice. For more detailed information, visit the ATO website and consider using tools like the myDeductions app for record-keeping and the depreciation and capital allowances calculator for calculating your deductions.