What is the fixed rate method for work from home deductions 2026?
For the 2026 tax year, the fixed rate method for work-from-home deductions in Australia is 67 cents per hour. This covers specific running costs like energy, internet, and stationery, simplifying claims while allowing separate deductions for larger assets.
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How it works in practice
Understanding the Fixed Rate Method
The Australian Taxation Office (ATO) introduced a revised fixed rate method for calculating work-from-home deductions, applicable from 1 July 2022 onwards, which will continue into the 2026 tax year unless further changes are announced. This method allows individuals to claim a set amount per hour worked from home, simplifying the record-keeping process compared to the actual cost method.
What the Rate Covers
Under the revised fixed rate method, the 67 cents per hour covers specific running expenses. These include electricity and gas for heating, cooling, and lighting, the decline in value of office furniture and office equipment (such as computers, printers, and phones), cleaning costs for a dedicated work area, and internet and mobile phone expenses. If you use this method, you cannot claim these specific expenses separately.
How it Works
To use this method, you need to keep a record of the total hours you worked from home during the income year, such as a diary, timesheet, or roster. The rate is designed to cover the common costs associated with working remotely, offering a streamlined approach to claiming deductions.
Important exceptions
The fixed rate method is generally straightforward, but has important qualifications. You cannot claim any expenses covered by the 67 cents per hour rate separately. This includes electricity, gas, internet, phone, stationery, and computer consumables. If you wish to claim these items individually, you must use the actual cost method, which requires more detailed record-keeping.
Additionally, you must incur the expenses yourself; you cannot claim for costs your employer reimburses. You also need to have a record of the hours worked from home, even if it's a representative four-week period to estimate your annual hours.
What you should do now
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Maintain a detailed record of all hours worked from home throughout the income year, or a representative four-week period.
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Confirm that you have incurred the expenses (e.g., paid for electricity, internet, phone) that the fixed rate method covers.
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Calculate your total work-from-home deduction by multiplying your recorded hours by the fixed rate of 67 cents.
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Keep all records, including your hours log and any bills, for at least five years in case the ATO requests them.
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Consider if the actual cost method might yield a higher deduction for your specific situation, especially if you have significant, separately claimable expenses.
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