Claiming work from home expenses 2025

14/07/2025

Claiming work from home expenses 2025

Claiming Home Office Expenses in 2025: ATO Changes and What You Need to Know

Working from home in 2025? You may be eligible to claim valuable tax deductions, but the ATO has changed the rules again. Here’s what you need to know.

With hybrid work and remote work now the norm for many Australians, claiming work from home tax deductions can help reduce your taxable income. But the rules around home office expenses changed recently, and it’s important to understand exactly what you can (and can’t) claim on your 2024-25 tax return.

At Cashflow Financial, we’re here to help you navigate the latest ATO guidelines and make sure you’re claiming every dollar you’re legally entitled to.

What’s New for Home Office Tax Deductions in 2025?

The ATO has introduced several important changes that affect how you calculate your work-from-home expenses:

  1. The fixed rate has increased to 70 cents per hour (up from 67 cents).
  2. You no longer need a dedicated home office space to claim
  3. Many expenses that were previously claimed separately are now bundled into the 70c/hour fixed rate
  4. Record-keeping requirements have become stricter — you must log your actual hours worked

While these changes simplify some parts of the process, they may also reduce your overall tax deduction if you previously claimed significant expenses separately.

The Two Ways to Claim Home Office Expenses in 2025

The ATO offers two methods for claiming working from home tax deductions in 2025:

The Revised Fixed Rate Method – 70 cents per hour

Under this method, you simply multiply the number of hours you work from home by 70 cents per hour.

This fixed rate covers a range of running expenses:

  • Electricity and gas (for heating, cooling, lighting)
  • Internet usage
  • Mobile and home phone usage
  • Stationery and computer consumables (ink, paper, etc.)
  • Cleaning expenses for your work area

Key rules:

  • You can no longer claim any of these expenses separately if you use the 70c/hour method.
  • You must keep detailed records of actual hours worked from home.
  • You do not need a separate home office or dedicated work area — the space can be shared or multi-purpose.

This method is designed to simplify things, but in some cases, it can result in a smaller deduction than in previous years when you could claim many of these expenses individually.

The Actual Cost Method

The actual cost method allows you to claim each work-from-home expense individually, based on your actual usage.

Deductible items may include:

  • Electricity and gas (proportional business-use)
  • Internet and phone (based on actual work-related usage)
  • Stationery and consumables
  • Cleaning costs
  • Depreciation on equipment over $300 (e.g. desks, computers)
  • Full deduction for work-related items under $300

Record keeping requirements:

  • You must keep receipts, bills, invoices, and calculations for each expense.
  • You need to track either:
    • A continuous 4-week representative diary of your work patterns, or
    • A full 12-month log of hours worked from home.

While this method requires more detailed records and calculations, it often results in a larger deduction, particularly if you have high work-related expenses.

ATO Record-Keeping Rules: Much Stricter in 2025

One of the biggest changes is the ATO’s increased focus on accurate, ongoing record keeping.

You must keep:

Proof of Hours Worked

  • Timesheets
  • Rosters
  • Work system logs
  • Time-tracking apps
  • Regularly updated spreadsheets, diaries, or calendars

Estimates or “best guesses” are no longer accepted.

Proof of Expenses

  • Bills for electricity, internet, phone
  • Receipts for consumables (stationery, ink, paper)
  • Invoices for equipment purchases
  • Records of depreciation for assets over $300

If bills are not in your name (e.g. shared households), you must provide evidence showing your contribution to the expenses, such as a joint lease or shared credit card statement.

Which Method Gives You the Bigger Tax Refund?

The best method depends on your personal situation:

  • If you work from home occasionally with few extra costs, the fixed rate (70c/hour) may be simple and effective.
  • If you have significant expenses (such as expensive equipment, high electricity use, or large internet bills), the actual cost method may result in a bigger deduction.

At Cashflow Financial, we can assess both methods for you to ensure you maximise your refund while staying fully compliant with ATO rules. Book an appointment with us today