The ATO Fixed Rate Method — 70 Cents Per Hour
The Australian Taxation Office introduced a revised fixed rate method effective from the 2022–23 income year. The rate is 70 cents per work-from-home hour, replacing the previous 52 cents per hour rate (and the COVID-era 80 cents per hour shortcut). The 70c rate is available for 2022–23, 2023–24, 2024–25, and 2025–26 — it has not changed going into the current financial year.
The fixed rate is designed to be simple. Rather than tracking every individual expense, you multiply your total WFH hours by 70 cents to arrive at your deduction. This covers the following bundled expenses:
- Electricity and gas used for heating, cooling, and lighting your workspace
- Internet expenses (the work-related proportion)
- Phone expenses (mobile and home phone, work-related portion)
- Decline in value of stationery and computer consumables (e.g., printer ink, paper)
Importantly, the fixed rate does notcover the decline in value of depreciating assets such as laptops, monitors, office chairs, or desks. You can claim these separately using the ATO's depreciation rules, in addition to the fixed rate deduction.
How to Calculate Your WFH Deduction
The formula is straightforward:
- Total WFH hours = days worked from home × hours worked per day
- Annual deduction = total WFH hours × $0.70
For example, an employee working from home 200 days a year, 8 hours each day, accumulates 1,600 WFH hours. Their deduction is 1,600 × $0.70 = $1,120. At the 32.5% marginal rate, this produces an estimated tax saving of approximately $364.
Full-time remote workers (around 250 days, 8 hours/day = 2,000 hours) can claim up to $1,400 per year using the fixed rate. At the 37% marginal tax bracket, that translates to a tax saving of around $518.
Record-Keeping Requirements for 2025–26
A critical change introduced with the revised fixed rate (from 2022–23) is that you must maintain a full-year record of your WFH hours. The ATO no longer accepts a representative 4-week diary extrapolated across the year (as was allowed under the old 52c rate). You must have documentation covering the entire income year — 1 July to 30 June.
Acceptable records include:
- Electronic timesheets submitted to your employer
- Employer records, rosters, or logs showing WFH days
- A calendar or diary (digital or paper) recording daily WFH hours
- Start and end time records for WFH periods
You must also hold at least one document showing you incurred each type of expense covered by the rate — for example, an electricity bill showing your name and address, and a phone account. These documents do not need to show the work-related portion; they just need to confirm you incurred the expense.
The ATO can disallow WFH deductions on audit if adequate records are not held. Given the ease of keeping digital records (calendar apps, employer timesheets), it is strongly recommended that you start tracking from 1 July and maintain records throughout the year rather than trying to reconstruct them at tax time.
Fixed Rate vs. Actual Cost Method
You can choose either the fixed rate method or the actual cost method for any given year — but not both simultaneously for the same expenses. The best choice depends on your circumstances:
| Factor | Fixed Rate (70c/hr) | Actual Cost |
|---|---|---|
| Simplicity | High — just track hours | Low — track every expense |
| Record keeping | Hours log + one bill per expense type | Bills, receipts, usage diaries for all expenses |
| Better for | Most employees; modest WFH setups | High electricity, dedicated home office |
| Can claim depreciation separately? | Yes (on top of the 70c rate) | Yes (part of the actual cost claim) |
For most Australian employees — particularly those without a dedicated home office, or those on a shared internet plan — the 70c fixed rate is simpler and often comparable in value to the actual cost method. However, employees with high energy costs, a large dedicated workspace, or expensive equipment should calculate both and compare.
Claiming Depreciation on Equipment
As noted, the fixed rate does not include the decline in value of major assets. If you purchased work equipment for home use — such as a laptop, second monitor, ergonomic chair, standing desk, or printer — you may be able to claim the work-related proportion of the asset's decline in value (depreciation) as a separate deduction.
For assets costing $300 or less (or $150 or less for assets used only partly for work, where the work portion is $300 or less), you can claim an immediate deduction for the full work-related cost. For assets over $300, you must depreciate over the asset's effective life, using the ATO's effective life determinations.
If your employer provides and owns the equipment, you cannot claim depreciation yourself. Only equipment you purchased personally and use for work purposes qualifies.
Working From Home Deductions and Your Tax Return
WFH deductions are claimed in your individual tax return under Work-Related Expenses (labels D1–D5 and D15). Most tax agents and software (including myTax) will ask you to select the method and enter your total claim. The ATO pre-fills most income data but not WFH deduction amounts — you must enter these yourself.
If you are unsure which method to use, or if you have a complex WFH setup (e.g., running a home-based business, renting part of your home), consult a registered tax agent. You can find a registered agent at the Tax Practitioners Board register.
For a complete picture of your tax position, also check our Australian Income Tax Calculator and Tax Refund Estimator. If you salary sacrifice, use our Salary Sacrifice Calculator to model the impact on your take-home pay and HECS repayments. See the ATO's working from home expenses guide for the full authoritative detail.