Home Office Deduction Calculator Australia 2026: Fixed Rate vs Actual Cost
If you work from home — even part-time — you are entitled to claim a tax deduction for the costs involved. The ATO offers two methods: the fixed-rate method (67 cents per hour) and the actual cost method. This guide explains both, shows you how to calculate your claim, and includes a free calculator to find your best option.
Working from home? You could be claiming $500–$5,000+ in tax deductions — but only if you use the right method.
TL;DR — Quick Summary
- Fixed-rate: 67c/hr — simple, no receipts needed (except hours log).
- Actual cost: Track real expenses — higher claims for dedicated offices.
- Calculator: Try our free calculator to compare both methods.
Here's a complete breakdown of both methods, real examples, and a free calculator:
Quick Navigation
The Two Methods for Claiming Home Office Expenses
Since 1 July 2022, the ATO provides two ways to calculate your home office deduction. You can choose whichever method gives you the larger claim each year — but you must use the same method for all expenses in a single tax year.
| Feature | Fixed-Rate Method | Actual Cost Method |
|---|---|---|
| Rate | 67 cents per hour | Actual expenses incurred |
| What it covers | Energy, internet, phone, stationery | All home office running costs |
| Records needed | Hours worked from home | Hours + receipts for every expense |
| Depreciation | Claimed separately | Included in total claim |
| Best for | Most remote/hybrid workers | Dedicated home offices with high costs |
Fixed-Rate Method: 67 Cents Per Hour
The fixed-rate method is the simpler of the two options. You claim 67 cents for each hour you work from home. This rate covers:
What the 67c/hr rate covers
- Electricity and gas for heating, cooling, and lighting
- Internet expenses
- Mobile phone usage for work purposes
- Stationery and computer consumables
You can also claim depreciation of office furniture and equipment (desk, chair, monitor, etc.) separately, in addition to the 67c/hr rate.
How to Calculate
The formula is straightforward:
Formula: Hours worked from home × $0.67
Example: 2 days/week × 8 hours × 48 weeks = 384 hours
384 hours × $0.67 = $257.28
Add depreciation for your office setup (e.g., $300 desk over 10 years = $30/year, $800 monitor over 4 years = $200/year) and your total claim could reach $500–$1,000+.
Actual Cost Method
The actual cost method requires you to track your real expenses and calculate the work-related portion. This method can yield a higher deduction if you have a dedicated home office with significant running costs.
What You Can Claim
Occupancy costs — special rule
You can only claim occupancy costs (rent, mortgage interest, council rates) if you have a dedicated room used exclusively for work. Shared spaces like the kitchen table do not qualify.
How to Calculate the Work-Related Portion
You have two options:
Hours method
(Hours of work use / Total hours in the year) × expense. Similar to the fixed-rate approach but applied to actual costs.
Floor area method
(Office floor area / Total home floor area) × expense. Best for dedicated home offices with a specific room.
Free Home Office Deduction Calculator
Unsure which method is better for you? Use our free calculator to compare both methods side by side and find your optimal claim:
Home Office Calculator
Enter your hours, expenses, and equipment costs to see which method saves you more. Takes less than 2 minutes.
Calculate My Deduction →Real-World Examples
Sarah works from home 3 days per week, 8 hours per day.
Fixed-Rate Method
- Hours/year: 3 × 8 × 48 = 1,152
- 67c/hr claim: $771.84
- Plus depreciation: $275
- Total: $1,046.84
Actual Cost Method
- Electricity/internet/phone: ~$600/year
- Total: ~$600
The fixed-rate method gives Sarah a larger claim by ~$450.
David runs a consulting business from a dedicated home office room (15% of home).
Fixed-Rate Method
- 2,000 hrs × $0.67: $1,340
- Plus depreciation: $500
- Total: $1,840
Actual Cost Method
- Rent (15%): $3,600
- Electricity: $450
- Internet: $600
- Depreciation: $1,200
- Total: $5,850
David's dedicated office means actual cost is significantly better — $4,010 more.
What Records You Need
Fixed-Rate Method
- Record of hours worked from home (diary, timesheet, or calendar)
- 4-week representative period to establish pattern (full year is better)
- Receipts for separately claimed depreciation items
Actual Cost Method
- Records of hours worked from home
- Receipts for all claimed expenses (electricity, internet, phone)
- Calculation of work-related percentage for each expense
- Floor area measurements if using the area method
Retention period
Keep all records for 5 years from the date you lodge your tax return.
Common Mistakes to Avoid
No hours record
The ATO will disallow claims if you cannot show how many hours you worked from home. Start tracking now — even a simple spreadsheet works.
Claiming occupancy costs under fixed-rate
The 67c/hr rate does NOT cover rent, mortgage interest, or council rates. You can only claim these under actual cost with a dedicated office room.
Double-dipping
If you use the fixed-rate method, do not also claim electricity, internet, or phone as separate expenses — they are already included.
Not claiming depreciation separately
Under the fixed-rate method, you can still claim depreciation of office furniture and equipment separately. Many people miss this.
Track your hours
Start logging hours worked from home today — a simple calendar or spreadsheet works.
Calculate both methods
Use our free calculator to compare fixed-rate vs actual cost for your situation.
Gather your receipts
If actual cost looks better, collect electricity, internet, and phone bills for the year.
Talk to your accountant
Ask which method gives you the larger claim and what records you need to keep.
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