If you’ve spent time working from home during the 2024/2025 financial year, it’s important to understand the latest rules around claiming a tax deduction. The Australian Tax Office (ATO) has made changes to how people can claim working from home tax deductions, and knowing the difference in these methods could make a meaningful difference at tax time.
Two Methods for Claiming Working from Home Tax Deductions
There are only two methods you can use to claim a tax deduction for working from home:
1. The Actual Cost Method
This method involves tracking and calculating your actual expenses. You’ll need to keep receipts and invoices for your home-running costs and claim a portion of these based on your dedicated work area—usually determined by floor space.
To use this method:
- You must have a part of your home set aside exclusively for work.
- You must keep all documentation of expenses like electricity, internet, phone, stationery, and computer consumables.
2. The 67 Cents per Hour Method
This is a simplified approach introduced by the ATO. You multiply the number of hours you worked from home by 67 cents to calculate your working from home tax deduction.
This method covers:
- Electricity and gas
- Internet
- Mobile and home phone
- Stationery and computer consumables
You do not need to have a dedicated home office to use this method, and more than one person in a household can use it.
What Records Do You Need to Keep?
To claim working from home tax deductions using the 67 cents per hour method, the ATO now requires more specific record keeping. For the 2025 tax return, you must have:
- A record that represents the total number of hours worked from home between 1 July 2024 and 29 February 2025
- A daily record of actual hours worked from home between 1 March 2025 and 30 June 2025 (estimates will not be accepted)
In addition, you’ll need to keep at least one bill (monthly or quarterly) to show you actually incurred home-related expenses such as energy, phone, or internet—even though these are not used to calculate your deduction.
Talk to an EOFY Accountant About Your Working From Home Tax Deductions
Understanding how to claim your tax deductions—especially if you work from home—can be confusing. At MacMillan Cowan & Co, our team of experienced accountants will guide you through your tax return to make sure your return is accurate, compliant, and maximised.
Give us a call or contact us online to make your appointment today.