Work-from-Home Tax Deduction Estimator
Working from home? Estimate your potential tax deduction for home office expenses and maximize your tax refund.
Quick Use Samples
Fixed Rate Method
Results (Fixed Rate)
Actual Cost Method
Results (Actual Cost)
Breakdown of Deductible Expenses (Actual Cost Method)
Estimated Tax Refund Increase
$649
This is the estimated amount your tax refund could increase by, or your tax payable could decrease by.
💰 Ready to grow your money?
- 🔹 Raiz: Microinvest your spare change
- 🔹 Swyftx: Trade crypto with confidence
We may receive a commission from our partners if you sign up through these links. This helps us keep our tools free.
What is a Work-from-Home Tax Deduction?
In Australia, if you work from home, you can claim a tax deduction for the expenses you incur that are related to your work. This estimator helps you calculate your potential deduction using the methods approved by the Australian Taxation Office (ATO), which can reduce your taxable income and increase your tax refund.
Behind the Formula
The calculator uses two primary ATO methods. The 'Fixed Rate' method allows you to claim a set rate for every hour you work from home (e.g., 67 cents per hour from 2022-23), which covers common running expenses. The 'Actual Cost' method involves calculating the work-related portion of all your individual home office expenses, such as electricity, internet, and stationery. The calculator estimates your deduction under both methods to see which is more beneficial.
Expert Insights
- Record-keeping is essential. For the fixed-rate method, you must keep a log of all hours worked from home for the entire year. For the actual cost method, you need receipts for all expenses and a diary to show your work-from-home patterns.
- The ATO rules for WFH deductions have changed. A 'shortcut' method was available during the COVID-19 pandemic, but from July 1, 2022, the revised fixed rate or actual cost methods must be used.
- You cannot claim a deduction for expenses that your employer reimburses you for. You also generally can't claim occupancy expenses like rent, mortgage interest, or rates unless your home is your principal place of business.
Actionable Tips
- Keep a dedicated diary or use a spreadsheet to log your work-from-home hours. Start this at the beginning of the financial year and keep it up to date.
- If you use the actual cost method, use a representative 4-week period to establish a pattern of use for things like your internet or electricity, which simplifies the calculation.
- Use the ATO's myDeductions tool in their app to keep track of your hours and expenses throughout the year, which makes lodging your tax return much easier.
Real-World Examples
Full-time employee working from home 2 days a week
Someone works from home 2 days (15.2 hours) a week for 48 weeks. Using the fixed-rate method, they can claim a deduction for 729.6 hours, resulting in a deduction of approximately $489.
Freelancer using the actual cost method
A freelancer with a dedicated home office calculates that the work-related portion of their electricity, internet, and phone bills, plus stationery and computer depreciation, totals $2,500 for the year, which is a significant deduction.
Comparing the methods
An employee finds that the fixed-rate method gives them a deduction of $600. However, by gathering their receipts and using the actual cost method, they calculate a deduction of $950. They choose to use the actual cost method to get the larger deduction.
Glossary of Terms
Fixed Rate Method
An ATO-approved method for claiming WFH deductions, which allows you to claim a set amount per hour to cover running expenses.
Actual Cost Method
A method where you calculate the actual work-related portion of each of your home office expenses. This is more complex but can result in a larger deduction.
Depreciation
The decline in value of an asset over time. You can claim a deduction for the depreciation of home office equipment, such as computers and desks.