Evidence-backed. Sourced from the ATO’s myTax 2026 instructions, ATO working-from-home expenses guidance, PwC tax summaries, H&R Block, MacMillan Cowan and Treasury. General information only — not financial or tax advice. Your specific deduction depends on your individual circumstances and records. Consult a registered tax agent for personalised advice. Last updated: June 2026.
⚡ Key Takeaways
- For your 2025–26 return (lodged from July 2026), the ATO’s fixed-rate WFH method is 70 cents per work-from-home hour. ATO myTax 2026 instructions confirm: “Use the fixed rate method to claim a rate of 70c per hour you worked from home for 2025–26.” [1][2]
- The 70c rate bundles electricity, gas, internet, mobile and home phone, stationery, and computer consumables into one figure. If you use the fixed rate, you cannot also claim those items separately — doing so is double-counting and a specific ATO audit trigger. [2][3][4]
- The critical change since 2023: you must keep a contemporaneous record of your actual WFH hours throughout the year — not a year-end estimate or a reconstructed spreadsheet. Acceptable evidence includes timesheets, rosters, daily/weekly diaries, calendar entries or login records. [2][5][6]
- If the fixed-rate bundling doesn’t suit you — for example you work from home in a high-cost location with expensive internet and power bills — the actual cost method lets you calculate the exact work-related proportion of each expense. It requires more record-keeping but can produce a larger deduction. [2][3][11]
- From 1 July 2026, a new $1,000 standard work-related expense deduction is proposed — available without receipts for most employees. This does not apply to 2025–26 returns but is the next change already on the horizon. [9][10]
Australia Just Changed How Work From Home Deductions Are Calculated — Again
By The Fine Print editorial team | Last updated: June 2026 | 11 min read | ⚠️ Not financial advice
The ATO’s work-from-home rules have changed four times in four years. The old 52-cent shortcut is gone. The 67-cent transitional method is gone. The rule that you needed a dedicated home office is gone. What’s left in 2025–26 is a 70-cent fixed rate that looks simple — and is simple to calculate — but is harder to claim correctly than most people realise. The bundling rules mean you can’t stack phone and internet claims on top. The record-keeping rules mean a year-end memory estimate will fail an audit. And the upcoming $1,000 standard deduction from July 2026 is already being misunderstood. This guide covers exactly what applies to your 2025–26 return, what the traps are, and what to do about the ones that still catch people out.📋 What’s in This Guide
- The two WFH methods — fixed rate vs actual cost
- Exactly what 70c covers (and what it doesn’t)
- The record-keeping trap — what the ATO actually requires
- Fixed rate vs actual cost — which is better for you
- The $1,000 standard deduction — what’s coming in 2026
- Three actions before you lodge
- Frequently asked questions
The Two WFH Methods — Fixed Rate vs Actual Cost
For your 2025–26 tax return, there are exactly two ATO-sanctioned methods for claiming work-from-home expenses. No other method applies for this year. [1][2]Method 1 — Fixed Rate (70c per hour)
Claim 70 cents for each hour you worked from home. The rate covers a bundled set of running expenses and requires a contemporaneous record of hours. [1][2]Method 2 — Actual Cost
Calculate the work-related proportion of each expense individually — electricity, internet, phone, stationery — using floor space percentage, usage percentage or another reasonable apportionment basis. Keep full receipts and apportionment records for each item. [2][3][11]Exactly What 70c Covers (and What It Doesn’t)
The bundling is the most misunderstood element of the fixed-rate method. Here’s the complete picture: [2][3][4][1]✅ Included in the 70c rate — cannot also claim separately:
- Electricity and gas (heating, cooling, lighting)
- Internet (home broadband)
- Mobile phone and home phone (work-related usage)
- Stationery and office supplies
- Computer consumables (printer ink, USB drives, etc.)
✅ Can still be claimed separately on top of the 70c rate:
- Decline in value (depreciation) of office furniture — desk, chair, shelving
- Decline in value of equipment — computer, monitor, printer, webcam
- Cleaning costs for a dedicated home office
- Work-related portion of phone or internet if NOT using the fixed rate (actual cost method only)
⚠️ The double-claim trap: The most common error the ATO flags is claiming 70c per hour AND also separately claiming internet or phone expenses. The 70c rate bundles those items — claiming them again is double-counting. If you’re using the fixed rate, remove any separate internet or phone line items from your return. If you genuinely need to claim them separately, switch to the actual cost method. [2][3][4]
The Record-Keeping Trap — What the ATO Actually Requires
The 70c rate is simple arithmetic — hours × 70c = deduction. The complication is proving the hours. Since 1 March 2023, the ATO has required a contemporaneous record of actual hours worked from home — maintained as you go throughout the year. A spreadsheet filled in retrospectively in June or July, or a rough “I usually worked from home about 3 days a week” estimate, does not satisfy the requirement. [2][5][6][7]💡 Acceptable evidence of WFH hours includes: timesheets or rosters from your employer; a personal diary or log (daily or weekly); calendar entries in Outlook, Google Calendar or similar; login records from remote-access systems or VPNs; or any contemporaneous record that shows you were working from home at specific times. You must also keep at least one electricity or gas bill and one internet or phone bill to demonstrate you actually incurred the running expenses the rate covers. [2][5][6]
What the ATO means by “contemporaneous” is: recorded at or close to the time, not reconstructed from memory months later. H&R Block’s 2023 update specifically warned that millions of Australians accustomed to using rough estimates would be at risk under the new requirements. If an audit or compliance review uncovers that you don’t have adequate records, the ATO can reduce or deny the deduction entirely — meaning a tax benefit you assumed was “standard” effectively disappears. [12][5][6]The other requirement is that you must actually be working from home to fulfil your employment duties — not just answering the occasional email from the couch. If your employer’s records show you attended the office full-time, a WFH deduction claim will be inconsistent with that data. [2][3]Fixed Rate vs Actual Cost — Which Is Better for You
Most people default to the fixed rate because it’s simpler. But “simpler” and “better” aren’t the same thing. Whether the fixed rate or actual cost method produces a larger deduction depends entirely on your individual circumstances. [2][3][11]The fixed rate under-compensates heavy WFH users in certain situations. If you work from home most of the week, live in a high-cost rental, run multiple monitors and a high-powered computer, use air conditioning all day, and have a dedicated high-speed fibre connection — your actual running costs for the work-related portion of those expenses may comfortably exceed 70c per hour. This is especially true in regional areas where internet data costs are higher, or where you bear the full cost of utilities without a partner splitting the bills. [2][11][3]💡 A simple comparison exercise: Add up your annual electricity/gas bills, internet and phone bills, and any stationery or consumables costs. Estimate the work-related percentage of each (typically floor-space ratio × hours ratio for power; work-use percentage for phone and internet). If that total exceeds 70c × your WFH hours for the year, the actual cost method gives you a better deduction. If it’s lower, stick with the fixed rate and enjoy the simplicity. Do the comparison once — it takes about 20 minutes and the answer tells you which method to use. [2][11][3]
The $1,000 Standard Deduction — What’s Coming in 2026
Treasury’s 2026 exposure draft proposes a $1,000 standard work-related expense deduction available to most employees from 1 July 2026, without receipts. This is designed to simplify work-expense claims for people with straightforward situations. It does not apply to the 2025–26 return you’re lodging now — it would apply from the 2026–27 year onwards, if legislated as proposed. [9][10][13]The proposal would coexist with existing WFH methods — employees with total work-related expenses above $1,000 could still use the fixed-rate or actual-cost methods, supported by records. The concern flagged by tax practitioners is the opposite risk: people with genuine total work-related expenses above $1,000 (WFH hours + work equipment + phone + union fees + self-education) who don’t do the maths and default to the $1,000 standard amount — effectively leaving money on the table in exchange for convenience. When the standard deduction arrives, the right approach is to calculate your real expenses first and only take the standard amount if it’s a better deal. [10][13][11]✅ Three Actions Before You Lodge
Action 1: Pick your method based on numbers, not habit
Before deciding whether to use the fixed rate or actual cost method for 2025–26, do the comparison. Gather your electricity/gas bills, internet bills and phone bills for the year. Estimate the work-related percentage for each. Calculate the actual cost method total. Then calculate 70c × your total WFH hours for the year. Whichever is higher is the method you should use — assuming you have the required records for it. Most people haven’t done this comparison and are leaving money unclaimed (or are double-claiming without realising it). The method that seems more complicated often produces a larger deduction for heavy WFH users. [2][11][3]Action 2: Start (or fix) your WFH hours diary immediately
If you’re in the 2025–26 year and don’t have a contemporaneous hours log, start one today. A spreadsheet with date, start time, finish time and a brief note (e.g. “WFH — office closed”) is sufficient. If you don’t have records for earlier months of the year, speak to a registered tax agent about what’s realistically reconstructable from other evidence (calendar invites, Outlook data, employer confirmation) and whether you should reduce your claim to what you can actually substantiate. Claiming hours you can’t prove is a shortfall risk; claiming nothing when you genuinely worked from home is unnecessary. The right answer is somewhere in between, guided by your records. [2][5][6]Action 3: Bundle your bills and evidence in one folder
Create a “WFH 2025–26” folder — digital or physical — and put the following in it: your hours log or diary; at least one electricity or gas bill; at least one internet or phone bill; invoices for any office furniture or equipment you bought during the year (desk, chair, computer, monitors); and any receipts for stationery or consumables if you’re using the actual cost method. This takes 10 minutes to assemble now and saves hours if the ATO queries your claim as part of its 2026 focus on work-related deductions. A complete, organised file means you respond quickly; scrambling for 12 months of paperwork in response to a review letter is a much worse experience. [5][6][3]❓ Frequently Asked Questions
What is the 2025–26 WFH rate?
70 cents per hour worked from home. Confirmed in ATO myTax 2026 instructions. Covers electricity, gas, internet, phone, stationery and consumables in one bundled rate. [1][2]What records do I need?
A contemporaneous hours log (diary, calendar entries, timesheets) maintained throughout the year — not reconstructed at year-end. Plus at least one electricity/gas bill and one internet/phone bill. [2][5][6]Can I also claim phone and internet separately?
No — those are bundled into the 70c rate. Claiming them separately is double-counting. Switch to the actual cost method if you want to itemise them. [2][3][4]Does the $1,000 standard deduction apply this year?
No. It’s proposed from 1 July 2026 (i.e. the 2026–27 year). For your 2025–26 return, only the 70c fixed rate or actual cost method applies. [9][10]Which method gives a bigger deduction?
Depends on your actual costs. Add up your real electricity, internet and phone bills, apply the work-related percentage, and compare to 70c × hours. Whichever is higher is the better method for you. [2][11][3]⚖️ The Fine Print Verdict
The 70c WFH rate is genuinely straightforward to apply — but only if you have the records. The ATO tightened the substantiation requirements in 2023 and they haven’t loosened since. A contemporaneous hours log is not optional; it’s the price of admission for any WFH deduction claim under the fixed-rate method. The bundling rules mean you can’t also stack phone and internet claims on top — and this is the single most common error in work-expense claims. For most people the fixed rate will be the right choice, but “most people” doesn’t mean “everyone” — if you work from home intensively and pay high bills, the actual cost method deserves a comparison before you default to the simpler option. And while the $1,000 standard deduction proposal sounds attractive, it’s not available for 2025–26, and when it does arrive it will only be the better option for people whose real total work-related expenses are genuinely under $1,000. Do the maths, keep the records, and you’ll be fine.
👉 Keep a contemporaneous hours log. Don’t double-claim phone and internet on top of the 70c rate. Compare fixed vs actual before you decide. And don’t confuse the upcoming $1,000 standard deduction with the current rules — it doesn’t apply yet.
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- ATO, “Other work-related expenses — myTax 2026 instructions,” ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/mytax-instructions/2026/deductions/work-related-expenses/other-work-related-expenses
- ATO, “Working from home expenses,” ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/working-from-home-expenses
- COSCA, “Home office expenses — what you can claim and ATO requirements in 2025,” cosca.com.au/learn/home-office-expenses-what-you-can-claim-and-ato-requirements-in-2025/
- Viden, “WFH rate change,” viden.com.au/wfh-rate-change/
- MacMillan Cowan, “Working from home tax deductions — what you need to know for the EOFY,” macmillancowan.com.au/working-from-home-tax-deductions-what-you-need-to-know-for-the-eofy/
- Small Business WA, “Get up to speed on the ATO’s working from home changes,” smallbusiness.wa.gov.au/blog/get-speed-atos-working-home-changes
- Wiselink Accountants, “Tax return Melbourne 2026 — ATO focus areas,” wiselinkaccountants.com.au/zh-hans/tax-return-melbourne-2026-ato-focus-areas/
- ATO, “What’s new for individuals 2025–26,” ato.gov.au/individuals-and-families/your-tax-return/before-you-prepare-your-tax-return/what-s-new-for-individuals
- Treasury, “Standard deduction for work-related expenses — consultation,” consult.treasury.gov.au/c2026-757530
- ATO, “Standard deduction for work-related expenses,” ato.gov.au/about-ato/new-legislation/in-detail/individuals/standard-deduction-for-work-related-expenses
- PwC tax summaries, “Australia — Deductions,” taxsummaries.pwc.com/australia/individual/deductions
- H&R Block, “Work from home update,” hrblock.com.au/tax-academy/work-from-home-update
- vlassisco, “TaxWise News Individual Edition May 2025,” vlassisco.com.au/wp-content/uploads/2025/05/TaxWise-News-Individual-Edition-May-2025.pdf
- ATO, “Taxation Ruling TR 93/30,” ato.gov.au/law/view/pdf?DocId=TXR%2FTR9330%2FNAT%2FATO%2F00001
- CKS Aksens, “ATO tax update 2026 — new 75c WFH fixed rate and digital diary rules explained,” cksaksens.com/global/en-au/ato-tax-update-2026-new-75c-wfh-fixed-rate-digital-diary-rules-explained/
This article is general information only and does not constitute financial or tax advice. WFH deduction rules are based on ATO guidance current as at June 2026. Your actual deduction depends on your records, individual circumstances, and which method you are entitled to use. Consult a registered tax agent before lodging. The Fine Print 🇦🇺 is not affiliated with the ATO or any firm mentioned.