How to Claim Work from Home Expenses in 2025 Using the Actual Cost Method

With the continued prevalence of remote work, understanding how to claim WFH expenses using the actual cost method is essential for maximising your tax deductions. This method allows you to claim the actual expenses incurred as a result of working from home, provided you maintain detailed records.

How to Claim Work from Home Expenses in 2025: Actual Cost Method 

Step 1: Determine Your Eligibility

Before proceeding, ensure you meet the following criteria:

• You are working from home to fulfill your employment duties, not just performing minimal tasks like checking emails.

• You incur additional running expenses as a result of working from home.

• You have records to prove the expenses you are claiming.

For more details, refer to the ATO’s guidance on working from home expenses.

Step 2: Identify Deductible Expenses

Under the actual cost method, you can claim the work-related portion of:

• Electricity and gas expenses for heating, cooling, and lighting.

• Home internet and phone usage.

• Depreciation of home office furniture and equipment.

• Cleaning expenses for your dedicated work area.

• Stationery and computer consumables.

Note: Occupancy expenses like rent or mortgage interest are generally not deductible for employees unless your home is your principal place of business. For more information, see the ATO’s page on occupancy expenses.

Step 3: Calculate the Work-Related Portion

For each expense:

1. Determine the total expense: Gather all relevant bills and receipts.

2. Calculate the work-related use: Estimate the percentage of the expense that relates to your work.

   • For utilities, consider the floor area of your workspace relative to your home.

   • For internet and phone, assess the proportion of work-related usage.

3. Apply the percentage: Multiply the total expense by the work-related percentage to find the deductible amount.

The ATO provides a home office expenses calculator to assist with these calculations.

Step 4: Account for Depreciation of Assets

If you’ve purchased equipment or furniture for your home office, you can claim depreciation based on the item’s cost and effective life.

1. Identify depreciable assets: Items like desks, chairs, computers, and printers.

2. Determine the effective life: Refer to the ATO’s guidelines or use their Depreciation and capital allowances tool.

3. Calculate the depreciation: Apply the appropriate method (e.g., diminishing value or prime cost) to determine the annual deduction.

Step 5: Maintain Accurate Records

The ATO requires you to keep:

• Receipts and invoices for all expenses.

• Records of how you calculated the work-related portion of each expense.

• A diary or logbook detailing your work-from-home hours.

You must retain these records for five years from the date you lodge your tax return. Utilising the ATO’s myDeductions tool can help streamline this process.

Step 6: Report Your Deductions

When completing your tax return, report your total work-from-home deductions at the appropriate section. Ensure that your calculations are accurate and that you have the necessary documentation to substantiate your claims.