Tax Planning Part 4: Tax Implications of Working from Home
- Arnold Shields
- Jun 5, 2024
- 2 min read
Updated: May 13
Home Office Tax Deductions: A Remote Work Essential
Since COVID-19, remote work has become the norm for many Australians. While working from home has its perks, it also comes with tax opportunities, if you know what to look for.
This guide will help you understand what you can claim, how to do it properly, and when you might need expert help.
Understanding the ATO Fixed Rate Deduction
The Australian Taxation Office allows employees to claim 67 cents per hour for every hour worked from home. This simplified method covers:
Electricity and gas
Internet and mobile use
Stationery and consumables
Decline in value of home office equipment (non-separately claimed)
Pros:
Easy record-keeping (you only need a log of hours worked)
No need to retain individual receipts
Cons:
You cannot claim extra on top of what’s already included in the rate
Doesn’t account for large purchases like office chairs or desks
Claiming Actual Costs for Greater Deductions
If you incur significant work-from-home costs, the actual cost method might deliver better tax results. This method allows you to claim:
A portion of electricity and internet
Home office furniture and equipment (depreciation may apply)
Cleaning and repair costs of your dedicated work area
You must keep receipts, invoices, and a work diary that details your hours and usage.
Are You Eligible?
To claim home office deductions, you need:
A clearly defined workspace (not necessarily a separate room)
Exclusive work use during the times you claim
Evidence of expenses and work patterns
Other Deductible Expenses to Consider
Beyond the basics, you might be able to claim:
A percentage of phone bills (if used for work)
Cleaning costs for your office space
Office supplies like notebooks, printer paper, ink
Pro Tip: Be disciplined about record-keeping. No receipts, no deduction.
Independent Contractors & Sole Traders: More Opportunities, More Responsibility
If you run a business from home, you may also be eligible to claim occupancy expenses, such as:
Rent or mortgage interest
Insurance
Council rates
However, claiming these can impact capital gains tax when selling your home. It’s a powerful deduction strategy, but one that requires expert planning.
Stay Compliant, Stay Ahead
Tax law is always evolving, especially with the rise of hybrid work. Choosing between the fixed rate and actual cost methods can significantly affect your refund.
Consulting with a tax advisor helps ensure:
You're maximising deductions
You're meeting ATO requirements
You're prepared in case of an audit
At Dolman Bateman, we specialise in helping remote workers and business owners stay compliant while making the most of their entitlements.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.