If you work from home, you can claim the extra costs of doing it. For example – electricity, internet, phone, stationery, and the depreciation on the equipment you use.

What has changed from 1 July 2026 (ie the 2026/27 financial year onwards) is that you may not have to prove any of it.

From 1 July 2026 there is a standard deduction of $1,000 for work related expenses, claimable with no receipts and no diary. So, now before you work out how to substantiate a claim, work out whether you need to at all.

Do you need to keep records at all?

The standard deduction is an “either or” choice. You take the flat $1,000, or you claim your actual work related expenses if they add up to more than that. You cannot do both.

Union and professional association fees are still claimed separately either way, so they sit on top of whichever option you choose. Nothing changes for donations or investment deductions.

So, the useful thing to know is roughly where you land.

At 70 cents per hour, $1,000 works out to about 1,430 hours of working from home. Across a working year that is close to being home every day. Some rough numbers, based on 46 working weeks:

Which leads somewhere most people do not expect. If working from home running costs are the only thing you claim, the standard deduction will usually beat the fixed rate method. You would need to be working from home almost every day of the year before the hourly rate on its own gets you past $1,000.

The fixed rate method starts to win when it is not the only thing on your return. Depreciation on a desk, a chair, a monitor or a laptop is claimed on top of the hourly rate. If you have car, travel, uniform or self education expenses as well then your total claimable deductions can move past $1,000 quickly.

So what should you do this year?

Keep the all your records during the year as normal, and then see after the end of the financial year whether you have exceeded $1,000.

The difficulty with an “either or” choice is the timing. You make the decision re standard or actual deductions after the year has ended, but you need to keep all the records during the year just in case the actual method works out better.

If you are going to or might claim actual work related expenses over $1,000, please also remember that your car logbook needs to cover a representative twelve continuous weeks sometime in the last five years and/or you still need to track your work related kms if using the cents per km method; and to claim working from home cents per hour you will need diary records for the full year.

Neither can be put together afterwards from memory, and if you skip them and then find your actual expenses would have been higher, the extra deduction is gone.

There is a reasonable case for stopping. If your work expenses have always been modest, you have no car claim, you have not bought home office equipment and you are not studying, take the $1,000 and stop thinking about it.

For everyone else, keeping a diary costs you a few minutes a month. Not keeping one could cost a few hundred dollars.

If you are not sure which group you are in, ask us. We can look at what you claimed last year and let you know.

Who can claim working from home expenses

To claim working from home expenses three things have to be true.

The work has to be substantive and directly related to earning your income. Occasionally checking email or taking a call at home does not qualify.

You have to have incurred additional costs because of it. If you live rent free and do not contribute to the bills, there is nothing extra for you to claim.

And you need records. Which records depends on the method you use.

The two methods

Fixed rate method

You claim a set amount for every hour you work from home.  The rate for 2025-26 is 70 cents per hour.  The rate for 2026-27 is 75 cents per hour.

You do not need a separate room or a dedicated office to use this method. The kitchen table counts.

The rate covers home and mobile internet or data, home and mobile phone use, electricity and gas for heating, cooling and lighting, and stationery and computer consumables. Once you use the fixed rate you cannot claim any of those separately, even if you have the bills.

You can still claim on top of the rate:

• Depreciation on work related technology and office furniture
• Items costing $300 or less, deductible in full where used mainly for work
• Repairs and maintenance of those items

That second list is where most of the money is for anyone who has bought equipment. It is also what usually decides whether an actual claim beats the standard deduction.

Actual cost method

You can only use this method if you have a dedicated home office space.  You work out the real cost of each expense and claim the work related portion.

This covers the same running expenses as the fixed rate, plus depreciation and cleaning. Anything used for both work and private purposes has to be apportioned on a fair and reasonable basis, and you need to be able to explain how you arrived at the split. 

It takes more work but it can produce a better answer for some people, particularly anyone with a genuine dedicated office and high running costs.

Records you need to keep

For the fixed rate method:

• A record of the actual hours you worked from home across the entire income year. A diary, a spreadsheet or a roster is fine. An estimate is not.
• At least one bill or invoice for each expense category the rate covers, to show you incurred the cost
• Purchase records for any depreciating asset you claim, showing what you paid and the work use percentage

For the actual cost method, all of the above plus receipts, bills or invoices for every expense you claim and your working for how you apportioned it.

Keep everything for five years from the date you lodge.

If you would like a head start, we have a working from home diary you can download and use for the year.

Download the working from home diary

Where this fits with the rest of your return

The standard deduction covers work related expenses generally, not just the working from home component. That means a car logbook, travel and self-education all fall on the same side of the decision. If you are close to the $1,000 line, those are the items most likely to tip it.

If you would like any help working out whether you should keep your records just in case, please have a quick chat with your Accountant to resolve.