Podcast Series: Less Than 15
December 8, 2025
In an attempt to better reflect contemporary working from home arrangements, the Australian Taxation Office (ATO) has announced a major update to the way taxpayers can claim income tax deductions related to work-from-home expenses.
Currently taxpayers can choose from two methods to calculate deductions – either the “actual cost” or “fixed rate” method. Only the fixed rate method is changing.
The revised fixed rate method applies from 1 July 2022 and can be used when taxpayers are working out deductions for their 2022–23 income tax returns.
Under the new ‘fixed rate’ scheme, taxpayers will be able to claim 67 cents per hour worked from home, up from 52 cents.
This rate covers ongoing expenses like phone bills, internet usage, and electricity expenses incurred while working from home.
Revised fixed rate method
The revised fixed rate method can be used from the 2022–23 income year onwards. The changes are:
Rate
What’s covered by the rate
What can be claimed separately
Home office
Record keeping
Examples of how to apply the fixed rate method are below.
You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year.
If you require assistance to set-up appropriate record keeping processes for yourself or employees, please contact your CIB manager for advice.
Further information about the update is available on the ATO website: https://www.ato.gov.au/Media-centre/Media-releases/ATO-announces-changes-to-working-from-home-deductions/
Fixed Rate Method Application – ATO Examples
Example: no additional deduction as expense covered by fixed rate
Keisha is an employee engineer. During 2022–23, Keisha works from home and uses her timesheets to record the hours she spends working from home.
At the end of the income year, Keisha works out that she worked at home for a total of 843 hours.
When she is working from home, Keisha incurs electricity expenses, internet expenses and mobile phone expenses. However, Keisha also uses her mobile phone for work purposes on days when she is not working from home.
If Keisha uses the revised fixed rate method to calculate her working from home expenses deduction, she can claim a deduction of $564. That is, 843 hours × 67 cents per work hour in her 2022–23 tax return.
Keisha can’t claim a separate deduction in her tax return for the mobile phone expenses she incurs when she’s not working from home as the rate per work hour includes this expense.
If Keisha wants to claim all of her work-related mobile phone expenses, she will need to use the actual costs method to calculate her claim for working from home expenses.
Example: deduction calculated using revised fixed method
Yang is employed as a software engineer. On 6 December 2022, Yang starts working from home 2 days a week and at the office 3 days a week.
On 1 December 2022, Yang buys a desk for $250 and an office chair for $299. Yang only uses the desk and office chair when working from home.
When working from home, Yang uses his work laptop, his personal internet connection and his personal mobile phone. Yang also uses the air conditioner in his spare room to cool and heat the room he works in.
Yang uses a spreadsheet to record the time he starts and finishes working from home. Yang also keeps one quarterly invoice for his electricity expenses, one monthly internet bill and one monthly mobile phone bill for the period between 6 December 2022 and 30 June 2023.
At the end of the 2022–23 income year, Yang decides to use the revised fixed rate method to calculate his working from home deduction. Yang calculates his deduction manually as follows:
When he lodges his 2022–23 tax return, Yang includes a deduction of $924 for his working from home expenses.
Example: Representative record of hours worked from home
Wanda has an agreement with her employer to work from home one day a week. She is required to work 8 hours each working day (40 hours per week). Wanda sits at her kitchen table when she works at home and uses her employer provided laptop and mobile phone. Wanda uses her own internet connection and electricity.
Wanda keeps one monthly internet bill and a quarterly electricity bill but she doesn’t keep any records of the hours she spent working from home during the period from 1 July 2022 to 28 February 2023.
Wanda has evidence of:
Wanda can use these documents to work out the hours she worked from home during the first 8 months of the year. She works this out as:
Weeks from 1 July 2022 to 28 February 2023 = 34 weeks
34 weeks − 2 weeks (annual leave) = 32 weeks
(32 weeks × 1 day per week) × 8 hours per day = 256 hours
For the period from 1 March 2023 to 30 June 2023, Wanda keeps a record in her email calendar of when she starts and finishes work (including any breaks) on the day she works from home each week. At the end of the 2022–23 income year, Wanda calculates the hours she worked from home during this 4 month period as 129 hours.
Wanda can claim a deduction for her working from home expenses using the revised fixed rate method because she has kept records of:
Wanda calculates deduction as:
(256 hours + 129 hours) × 67 cents = $258 (rounded up to the nearest whole dollar).
You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year.
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