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§ 08 — Tax

Which WFH deduction method puts more money back?

The ATO's fixed rate method (70¢/hour for 2024–25) is quick to claim — but the actual cost method can be worth more if you have genuine work-related expenses. Enter your numbers and we'll tell you which one wins.

Updated · Jun 2025·Source: ATO PCG 2023/1·Read · 5 min

Your inputs

Annual taxable income

A$

Fixed rate method

hrs
wks

70¢/hour covers electricity, internet, phone & stationery.

Actual cost method

A$
A$
%
A$
%
A$
A$

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The result

Recommended · Actual Cost method

$810

Estimated tax saving at 30% marginal rate · $243

Fixed rate deduction
$101
Tax saving: $30
Actual cost deduction
$810
Tax saving: $243
Recommended

The actual cost method gives you $709 more in deductions — worth $213 extra in tax back at your 30% marginal rate.

Actual cost breakdown

Extra electricity$300
Internet (30% work use)$360
Phone (25% work use)$150
Total actual cost deduction$810

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The fixed rate method: 70 cents per hour in 2024–25

The ATO's revised fixed rate method has been in place since 1 July 2022. The rate was initially set at 67 cents per hour and increased to 70 cents per hour from 1 July 2024 (i.e., for the 2024–25 income year).

The fixed rate covers electricity and gas, internet, phone, stationery, and computer consumables. If you use the fixed rate, you cannot separately claim any of those categories — you are only allowed to additionally claim the decline in value (depreciation) of depreciating assets used for work, such as a laptop, desk, or chair.

The big change from the old 52-cents-per-hour method is that the revised method requires you to record actual hours worked from home — a four-week representative diary is no longer sufficient. Keep a timesheet, employer records, or a running tally in your calendar.

You do not need a dedicated home office room to use the fixed rate method. Working from the kitchen table counts, provided you are actually performing your employment duties (not just doing incidental tasks like checking email on a phone).

The actual cost method: when it beats the fixed rate

The actual cost method requires more record-keeping but can produce a significantly higher deduction. You claim the real, work-related portion of each expense category — electricity, internet, phone, stationery, equipment, and depreciation — based on the fraction of time or use attributable to your work.

When does actual cost win? Generally when your total work-related expenses exceed what the fixed rate would produce. For example: if you work 3 hours/day for 48 weeks (720 hours), the fixed rate gives you $504. If your actual costs — increased electricity ($400), 50% of a $1,200 internet plan ($600), 30% of a $600 phone plan ($180), plus $200 in equipment — add up to $1,380, actual cost is clearly better.

The actual cost method requires a dedicated work area if you want to claim occupancy costs (rent, mortgage interest, council rates, water). These are the expenses most likely to make actual cost dramatically higher — but they come with a trade-off: claiming occupancy costs on your main residence creates a partial CGT liability when you sell. Most people opt to exclude occupancy costs even under the actual cost method.

Depreciationis worth calculating carefully. Under the ATO's instant asset write-off rules, items costing under $300 can be written off in full in the year of purchase. More expensive items (a $2,000 laptop, a $600 desk) depreciate over their effective life using the diminishing value method — typically 33.33% per year for computers, 10% for furniture.

§ Letters & replies

WFH tax, answered.

Common questions about work-from-home tax deductions in Australia.

What is the ATO fixed rate for 2024–25?+ open

70 cents per hour from 1 July 2024. The rate was 67 cents in 2022–23 and 2023–24. It covers electricity, internet, phone, stationery, and consumables — you cannot separately claim those while using the fixed rate.

Do I need a dedicated home office?+ open

Not for the fixed rate method — you just need actual WFH hours. You do need a dedicated work area to claim occupancy costs (rent, mortgage interest) under the actual cost method.

What records does the ATO require?+ open

For the fixed rate method: a record of actual hours worked from home (diary, timesheet, roster, or employer letter). A four-week sample diary no longer suffices. For the actual cost method: receipts and bills for every expense category claimed, plus a diary showing the work-use proportion.

Can I claim rent or mortgage interest?+ open

Only under the actual cost method, and only if you have a dedicated home office area. Be aware this triggers a partial main-residence CGT exemption loss — most people deliberately avoid claiming occupancy costs for this reason.

Can I claim a new laptop or chair?+ open

Yes, regardless of which method you use — equipment depreciation is claimable under both. Items under $300 used exclusively for work can be written off in full. More expensive items depreciate over their effective life (e.g. 33.33%/year for computers). You must apportion the cost by the work-use fraction if the item is also used privately.

How do I calculate electricity for actual cost?+ open

The ATO publishes an approved electricity rate per hour for home offices (currently 5.20 cents/hour per energy unit). Alternatively, you can use your actual power bills, identify the number of WFH hours, and apportion by the rooms in your home used for work. The approved rate method is easier — multiply total WFH hours by 0.052 by your electricity rate per kWh.

Is this calculator a substitute for tax advice?+ open

No. This calculator is a guide to help you understand which method may be more advantageous. The ATO's rules have nuances that depend on your specific employment arrangement and expenses. Consult a registered tax agent for advice tailored to your situation.

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