Employees working from home may be able to claim a deduction for the expenses they incur that relate to their work.
Eligibility to claim
To claim your working from home expenses, you must:
be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
incur additional expenses as a result of working from home.
You can claim a deduction for the additional running expenses you incur as a result of working from home.
Running expenses are expenses which relate to the use of facilities within your home and include:
electricity expenses for heating or cooling and lighting
the decline in value of office furniture and furnishings as well other items used for work – for example, a laptop
internet expenses
phone expenses.
In limited circumstances, you may also be entitled to claim occupancy expenses.
If your employer pays you an allowance to cover your working from home expenses, you must include it as income in your tax return.
If you're a sole trader or business owner and your home is your principal place of business, see deductions for home-based business expenses.
How to claim work from home expenses
To claim a deduction for expenses you incur when working from home you need to:
use one of the methods set out below to calculate your deduction
keep records that show you incurred the expenses.
You can use the method that suits your circumstances. The methods to choose from include the:
Fixed rate method An amount per work hour for additional running expenses plus expenses not covered by the fixed rate
Actual cost method The actual expenses you incur as a result of working from home
Shortcut method An all-inclusive rate per work hour, only available from 1 March 2020 to 30 June 2022
Expenses you can't claim
You can't claim a deduction for the following expenses if you're an employee working at home. These include:
coffee, tea, milk and other general household items, even if your employer may provide these at work
costs that relate to your children's education such as equipment you buy – for example, iPads and desks, subscriptions for online learning
items your employer provides – for example, a laptop or a phone
any items where your employer pays for or reimburses you for the expense.
Occupancy expenses
Occupancy expenses are expenses you pay to own, rent or use your home. They include:
mortgage interest
rent
council and water rates
land taxes
house insurance premiums.
As an employee working from home, generally:
you can't claim occupancy expenses
there will be no capital gains tax (CGT) implications for your home.
You can only claim occupancy expenses if you can show that:
it was necessary for you to work from home because your employer doesn't provide you with an alternative place to work from
the area of your home that you use for work is exclusively or almost exclusively used for work purposes and isn't readily capable of being used for any other purpose.
Occupancy expenses can generally be apportioned on a floor area basis. You must also apportion your expenses on a time basis if you only use that area of your home for work purposes for part of the year.
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