Working-from-home deductions, done right

The rules around claiming working-from-home expenses have changed more than once in the last few years, and the record-keeping requirement in particular catches people out. Not because it's complicated, but because it's stricter than most people assume.

The fixed rate method — the current rate

The current fixed rate is 70 cents per hour worked from home. This single rate is designed to cover a bundle of running costs together, rather than you claiming each one separately:

• Home and mobile internet or data
• Mobile and home phone usage
• Electricity and gas for heating, cooling and lighting
• Stationery and computer consumables

Once you're using the fixed rate, you can't also claim a separate deduction for any of those specific items, the 70 cents is meant to cover them as a bundle.

What you can still claim on top

The fixed rate doesn't cover everything. You can generally still claim, separately:

• Depreciation on larger items like your computer, monitor, desk or office chair
• Repairs and maintenance to those items
• Immediate deduction for anything in that category costing $300 or less
• In limited circumstances with a genuinely dedicated home office, a portion of occupancy costs like cleaning

The record-keeping requirement — the part that actually catches people out

This is where most people fall short, and it's worth taking seriously: the ATO wants an actual, contemporaneous record of the hours you worked from home. A timesheet, roster, diary, or similar record kept at the time, not an estimate reconstructed at tax time. A statement like "I worked from home most days, so I'll estimate 30 hours a week" isn't going to hold up if it's ever queried.

On top of the hours record, you also need at least one record showing you actually incurred each type of expense the rate is meant to cover (a phone bill, an internet bill, an electricity bill). You don't need to apportion these precisely yourself, but you do need to show the expense existed.

Records need to be kept for five years from when you lodge the return that relies on them.

A simple way to stay on top of it

The easiest approach we see working: keep a running note (a spreadsheet, a note on your phone, a calendar you actually use) of the hours you work from home, updated weekly rather than reconstructed in July. Combined with keeping a copy of one phone bill, one internet bill and one power bill from during the year, that's usually enough to support a fixed-rate claim without any scrambling at tax time.