General information only. This page is general information from Home Sweet Office. It is not tax advice. It summarises and quotes what the Australian Taxation Office (ATO) publishes, and it does not take your circumstances into account. Whether you can claim anything, and how much, depends on your own situation. Check your own circumstances with a registered tax agent before you claim.
Every figure on this page is the ATO’s figure for the 2025-26 income year (1 July 2025 to 30 June 2026). The ATO sets its rates and limits each year. For any later year, use the link to the ATO page beside each figure. Last checked against ato.gov.au on 13 October 2026.
If you work from home, the ATO sets out when you can claim a deduction for the extra costs, how to work it out, and what records you need. The rules are different depending on whether you are an employee or you run a business from home, so this page keeps the two apart.
Which set of rules applies to you
- Employees. The ATO’s Working from home expenses pages are written for people who work from home to carry out their employment duties.
- Sole traders and partnerships. The ATO says: “If you’re a sole trader or business owner and your home is your principal place of business, see Deductions for home-based business expenses.” That page is Deductions for home-based business expenses, with more detail at Home-based business expenses: sole trader or partnership.
- Companies and trusts. The ATO says your business structure “can affect the method you can use and the expenses you can claim, especially if your business is a company or trust”. See Home-based business expenses: company or trust. This page does not cover companies or trusts.
If you are an employee
Who can claim
The ATO says that to claim working from home expenses you must:
- “work from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls”
- “incur additional running expenses because you work from home”
- “have records that show you incurred these expenses, for example receipts”.
Where an expense is partly private, the ATO says “You can only claim the work-related portion as a deduction.” The ATO also says you cannot claim “items your employer provides” or “expenses your employer reimburses you for”.
Source: ATO, Working from home expenses (ATO page last updated 8 June 2026).
The ATO gives two ways to work out the claim: the fixed rate method and the actual cost method.
Method 1: the fixed rate method
You multiply the hours you worked from home by a rate per hour that the ATO sets for each income year.
For the 2025-26 income year the rate is 70 cents per work hour. The ATO’s page says: “2024-25 and 2025-26: use 70 cents per work hour”.
The ATO sets the rate by income year. To check the rate for 2026-27 or any other year, go to the ATO’s fixed rate method page.
What the rate covers. The ATO says the rate includes your additional running expenses for:
- home and mobile internet or data
- mobile and home phone usage
- electricity and gas for heating, cooling and lighting
- stationery and computer consumables, such as printer ink and paper.
The ATO says: “If you’re using this method, you can’t claim an additional separate deduction for these expenses.”
What the rate does not cover. Furniture and technology are outside the rate. The ATO says: “You can separately claim a deduction for the work-related use of technology and office furniture such as chairs, desks, computers, bookshelves.” See “Desks, chairs and equipment” below for how.
Records for the fixed rate method. The ATO says you must keep:
- “a record of the number of actual hours you work from home during the entire income year”, for example a timesheet, roster or diary. The ATO adds that “an estimate of your hours won’t be acceptable”.
- “at least one record for each of the additional running expenses you incur that the rate per work hour includes”, for example one electricity bill.
The ATO’s own example (2025-26). Keisha is an employee who works from home for 843 hours in 2025-26. The ATO says she “can claim a deduction of $590 (843 hours × 70c) in her 2025-26 tax return”. The ATO disregards the cents; it does not round up.
Source: ATO, Fixed rate method (ATO page last updated 8 June 2026).
Method 2: the actual cost method
You work out the actual additional expenses you incur because you work from home, and claim the work-related part. The ATO lists the decline in value of depreciating assets (for example a desk or chair), electricity and gas, phone, data and internet, stationery and computer consumables, and cleaning a dedicated home office.
The ATO says you must “apportion your deduction on a fair and reasonable basis”. It also says: “You don’t incur additional running expenses if other members of your household (who are not working from home) are in the same room as you while you are working from home.”
Records for the actual cost method. The ATO asks for either a record of the actual hours you work from home for the whole income year, or “a continuous 4-week period that represents your usual pattern of working at home”. You must also keep the receipts and bills, and a record of how you worked out the claim.
Source: ATO, Actual cost method (ATO page last updated 8 June 2026).
Desks, chairs and equipment (employees)
The ATO treats office furniture and technology as depreciating assets. Under either method, an employee can only claim the work-related part of the cost.
Assets costing $300 or less (2025-26). The ATO allows an immediate deduction only if the asset passes all four of its tests:
- it cost $300 or less (the cost includes delivery)
- you use it mainly, “more than 50% of the time”, to earn income that is not income from carrying on a business
- it is not part of a set that you start to hold in the income year that costs more than $300 in total
- it is not one of a number of identical, or substantially identical, items bought in the income year that together cost more than $300.
The ATO says: “You can’t treat items that are part of a set or identical separately to avoid working out the decline in value.”
Source: ATO, Assets costing $300 or less (ATO page last updated 8 June 2026).
Assets costing more than $300 (2025-26). The ATO says “you can claim a deduction for the cost over the effective life of the asset”. That yearly amount is called the decline in value. You choose the prime cost method or the diminishing value method for each asset, and the ATO says “Once you have made a choice, you can’t change the method in future income years for that asset.” The ATO also says you “may choose to allocate the depreciating asset to a low-value pool where its cost is less than $1,000”.
The claim is worked out from the days you held the asset in the year, and the ATO says “you can only claim a deduction for the decline in value when you start using it for work”. The ATO’s Depreciation and capital allowances tool does the calculation.
Source: ATO, Assets costing more than $300 (ATO page last updated 8 June 2026).
Effective lives the Commissioner of Taxation has set (2025-26). These come from Table B of the ATO’s effective life determination, LI 2025/20, which the ATO’s 2025-26 guidance names as the latest. You can use the Commissioner’s figure or work out your own estimate.
| Asset, as the ATO describes it | Effective life |
|---|---|
| Office furniture, freestanding: desks | 20 years |
| Office furniture, freestanding: chairs | 10 years |
| Workstations (including desks and partitions) | 20 years |
| Bookcases: timber 15 years, metal 20 years | 15 or 20 years |
| Mobile/portable computers (including laptops, tablets) | 2 years |
| Desktop computers (including personal computers) | 4 years |
| Computer monitors | 4 years |
| Multi function machines (includes fax, copy, print and scan functions) | 5 years |
| Mobile phones | 3 years |
Source: ATO, LI 2025/20, Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025, Schedule 2, Table B. The ATO reissues this determination from time to time. To check the effective life for 2026-27 or a later year, use the determination named on the ATO’s Assets costing more than $300 page.
Records for furniture and equipment. The ATO says you must keep a receipt showing the supplier, the cost, a description of the asset and the purchase date, a record of when you started using it, and how you worked out your work-related percentage. It says: “You need to keep your written evidence and records for 5 years from the date of your last claim for decline in value.”
Source: ATO, Keeping records for depreciating assets (ATO page last updated 8 June 2026).
Rent, mortgage interest and rates (employees)
The ATO says that as an employee working from home, generally “you can’t claim occupancy expenses”. There is a narrow exception for a home area that has the character of a place of business, and it can affect capital gains tax when you sell your home.
Source: ATO, Occupancy expenses (ATO page last updated 8 June 2026).
If you are a sole trader or run a small business from home
The employee rules above are not your rules. The ATO has a separate set for a business run from home, and the $300 immediate deduction described above is for assets used mainly to earn non-business income.
Running expenses
The ATO says: “You can claim the additional running expenses you incur as a result of running your business from home, even if you don’t have an area of your home set aside as a ‘place of business’.” It lists three ways to work out the business portion:
- Fixed rate method. The same hourly rate as above (70 cents per hour for 2025-26), for each hour you work from home. The ATO says it covers electricity, gas, internet, mobile and home telephone, stationery and computer consumables, and that “you can’t claim a separate deduction for any of these expenses”. You need a record of all hours worked from home for the whole income year and one bill for each expense type.
- Actual cost method. The actual additional costs, with records showing what you spent and the business-use portion.
- Floor area method. Available “if you have an area of your home set aside as a ‘place of business'”.
Whichever you use, the ATO says the method must be reasonable in your circumstances, must exclude your private living costs, and must be backed by records showing how you worked it out.
The ATO’s own example (2025-26). Pam is a sole trader who works 1,440 hours from home in the year and uses the fixed rate method. The ATO’s table shows running expenses of “70c per hour for 1,440 hours”, which is $1,008.
Source: ATO, Home-based business expenses: sole trader or partnership (ATO page last updated 27 May 2026).
Desks, chairs and equipment (business)
The ATO says: “If you use the fixed rate method, you can separately claim a deduction for the decline in value of depreciating assets, such as laptops, mobile phones and office furniture.” If an asset is used partly privately, you claim the business-use portion only.
How you claim depends on which depreciation rules your business uses. The figures below are for the 2025-26 income year:
- Simplified depreciation rules. The ATO says you can choose these “if you have a small business with an aggregated turnover of less than” $10 million. They include the instant asset write-off, which lets an eligible business claim “an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use”. For the 2025-26 income year the ATO’s page gives the limit as $20,000 (it refers to “the $20,000 Instant asset write-off limit for the 2025-26 income year”), and the asset’s full cost must be less than the limit. If you choose the simplified rules, the ATO says you must “apply the entire set of rules, not just individual elements”.
- General depreciation rules. If you do not use the simplified rules, you claim the decline in value over the asset’s effective life (see the effective life table above).
The limit has changed over the years. To check the limit for 2026-27 or any other year, go to the ATO’s instant asset write-off page.
GST. The ATO says: “If your business is registered for GST and can claim a full GST credit on the purchase of an asset, you exclude the GST amount paid when calculating the asset’s cost for depreciation purposes.” If you are not registered for GST, the GST you paid is part of the cost.
Sources: ATO, Simpler depreciation rules for small business and ATO, Instant asset write-off for eligible businesses (both last updated 28 August 2026); ATO, Deductions for home-based business expenses (last updated 18 June 2026).
Rent, mortgage interest and rates (business)
The ATO says: “You can only claim occupancy expenses if the area of your home set aside for your business has the character of a ‘place of business’.” It also warns that if you have such an area, “you may have to pay tax on any capital gains you make when you sell your home”. The personal services income rules can limit these claims too. This is a part of the rules where your own circumstances matter a great deal.
Source: ATO, Home-based business expenses: sole trader or partnership.
Business records
The ATO says you need to keep “complete and accurate records for at least 5 years to substantiate your claims for all of your home-based business expenses”.
Source: ATO, Deductions for home-based business expenses.
Common questions
Is the fixed rate the same every year?
No. The ATO sets it by income year. For 2025-26 it is 70 cents per work hour. For 2026-27 or any other year, use the rate on the ATO’s fixed rate method page.
Does the fixed rate include my desk and chair?
No. The ATO says the fixed rate method “allows separate claims for expenses not covered by the fixed rate, such as the decline in value of depreciating assets”.
Do I need a separate room?
Not for the fixed rate method. The ATO says it “doesn’t require you to have a dedicated home office”.
Can I estimate my hours at the end of the year?
Not under the fixed rate method. The ATO says “Only a record kept at the time the hours are worked from home is acceptable.”
If I buy a desk or chair from Home Sweet Office, can I claim it?
We cannot tell you that. Whether a purchase is deductible, how much of it, and in which year depends on how you earn your income, how much you use the item for work, what it cost and what records you keep. Check your own circumstances with a registered tax agent.
Where can I work it out?
The ATO has a Home office expenses calculator for employees. The ATO says it “covers the 2013-14 to 2025-26 income years” and that its results are “an estimate and for guidance purposes only”.
Setting up your home office
If you are putting a workspace together, you can browse our office chairs, sit-stand desks and monitor arms. Orders over $150 ship free to most of Australia. Some bulky items exclude remote areas.
General information only, not tax advice. Home Sweet Office sells home office furniture. We are not giving tax advice, and nothing on this page is a statement that any purchase is deductible for you. Check your own circumstances with a registered tax agent. For the rules in full, go to ato.gov.au.
