Home office deduction in Australia — actual cost method vs fixed rate method explained

From 1 July 2022, the ATO revised the home office deduction rules. There are now two methods: the revised fixed rate method (formerly called the 52-cent method) and the actual cost method.

Revised fixed rate method (67 cents per hour from 1 July 2022): You claim 67 cents per hour for every hour you work from home during the income year. This covers electricity, internet, phone, and stationery. Importantly, you can also separately claim depreciation on home office furniture and equipment (computers, desks, chairs) at their decline in value. You must keep a record of actual hours worked from home — time-tracking apps, timesheets, or a diary. The ATO no longer accepts a four-week representative sample from 1 March 2023.

Actual cost method: You calculate and claim the actual additional running costs incurred while working from home. This includes the work-use percentage of electricity, internet, phone, and decline in value of all equipment and furniture. You need to calculate the work area as a proportion of total floor area, and the work hours as a proportion of total usage. This method requires more records but can yield a higher deduction if your home office costs are significant.

You cannot claim: Rent, mortgage interest, or home insurance under either method (unlike a genuine home-based business). The home office deduction covers additional running costs only — not occupancy costs.

Tip: The 67 cents fixed rate is simpler. The actual cost method is worth the extra effort if you have a dedicated home office space with significant electricity or equipment costs.