Working From Home Tax Claims in Sydney

Working from home sounds simple until the tax claim needs evidence.

You worked from the spare room, kitchen table, bedroom desk or home office. You paid for internet, electricity, phone, software, stationery, office furniture or equipment. Maybe you are an employee working hybrid days. Maybe you run a business from home. Maybe the home office is used partly for work, partly for family life and partly for late-night admin.

The question is not only “Can I claim working from home?”

The better question is: what kind of working-from-home claim are we dealing with, and what records support it?

This page is for Sydney employees, business owners, contractors, and professionals who want their claims handled carefully rather than guessed at tax time.

Start By Separating Employee Claims From Business Claims

Working-from-home claims are not all the same.

An employee working from home for an employer is usually looking at work-related deductions. A sole trader or partnership running a home-based business may be looking at home-based business expenses. A company director working from home may need to think about how the company reimburses costs or records business-use expenses.

Those differences matter.

A Sydney employee using a laptop at home two days a week is not in the same position as a consultant who runs a full business from a dedicated home office. A tradie doing invoices at night from the dining table is not in the same position as an online store holding stock, packing orders and using part of the home for business.

Before looking at the amount, I want to know which situation applies.

That usually means asking:

• Are you an employee, sole trader, company director, contractor or business owner?
• Was the home used for employment, business activity, or both?
• Was there a dedicated work area?
• How many hours were worked from home?
• Which expenses were paid personally?
• Were any costs reimbursed by an employer or company?
• Are there private-use elements?
• What records were kept during the year?

A good claim starts with the right category.

If the issue is part of your personal tax return, my page on  individual tax return preparation in Sydney explains how I review income, deductions and records before lodgement.

The Fixed Rate Method Is Simple, But Not Record-Free

For many employees, the fixed rate method is the most common starting point.

The ATO’s  fixed rate method lets eligible taxpayers claim a set rate for each hour worked from home. The ATO’s 2026 myTax instructions state that the fixed rate method for 2025–26 is 70 cents per hour  (myTax 2026 other work-related expenses).

That sounds straightforward, but the record-keeping still matters.

The fixed rate method is not a licence to estimate from memory. You need a record of the actual hours worked from home for the income year. That may be a timesheet, roster, diary, calendar entry, employer record or other reliable record.

The fixed rate also covers certain running expenses, so you cannot double claim those same costs separately.

Before using this method, check:

• Did you actually work from home to perform employment duties or business work?
• Do you have a record of the hours?
• Were you reimbursed for any costs?
• Are you trying to claim something separately that is already covered by the fixed rate?
• Do you also have separate expenses, such as the depreciation of office equipment, that require their own treatment?

The fixed-rate method can be useful, but it still requires discipline.

Actual Cost Method Needs Stronger Records

The actual cost method may suit some taxpayers, but it usually needs more detailed evidence.

Instead of claiming a fixed hourly rate, you calculate the actual additional running costs associated with working from home. This can involve electricity, gas, internet, phone, and other expenses, depending on the facts and the ATO’s rules.

The ATO explains both the fixed-rate and actual-cost options on its main  working from home expenses page.

The actual cost method is not something I would use casually.

It may require:

• bills showing the expense
• a reasonable calculation of work-related use
• records of hours worked from home
• evidence of the additional cost
• private-use adjustments
• itemised phone or internet use where needed
• records for equipment and depreciation
• a method that can be explained if questioned

A larger claim may look attractive, but if the evidence is weak, the tax position is weaker.

This is where many people get into trouble. They know they worked from home, but they cannot show how the amount was calculated. A claim should not depend on a rough percentage chosen after the year has ended.

Occupancy Expenses Are Not For Every Home Worker

This is one of the most misunderstood areas.

Occupancy expenses are costs associated with owning or renting a home, such as rent, mortgage interest, council rates, land tax, or home insurance. These are not ordinary working-from-home running costs.

The ATO’s  occupancy expenses guidance makes clear that occupancy expenses are different from running expenses and points home-based businesses to separate guidance.

Employees should be very careful before assuming that rent or mortgage interest can be claimed for working from home.

For business owners, occupancy expenses may be relevant at times, but the facts matter. The ATO’s  deductions for home-based business expenses page explains that home-based business expenses can include running expenses and occupancy expenses, depending on the circumstances.

Before considering occupancy costs, I would want to understand:

• Is the home genuinely a place of business?
• Is there a clearly identifiable business area?
• Is that area used mainly or exclusively for business?
• Is the claim being made by an employee, sole trader, partnership or company?
• Could there be capital gains tax implications later?
• Are records strong enough to support the claim?

This is not an area to guess from a floor plan.

If you run a business from home, the claim may need to be reviewed as part of broader  small-business tax advice in Sydney, rather than treated as a simple personal deduction.

Home Office Equipment Needs Its Own Treatment

A desk, chair, monitor, printer, keyboard, headset, laptop, phone or lighting may be used for work from home.

But the tax treatment depends on the item, cost, ownership, use and whether private use is involved.

Some smaller items may be claimed immediately where the rules allow. Larger items may need depreciation. If an item is used partly for work and partly for private purposes, the claim may need to be apportioned.

A Sydney worker may have one laptop used for employment, private banking, study, streaming and family use. A business owner may buy a second monitor for use entirely by the business. Those situations should not be treated the same way automatically.

Keep:

• purchase invoices
• payment records
• date the item was first used
• business or work-use percentage
• notes on private use
• warranty or product details where useful
• records showing whether the item was reimbursed

The item might be physically in the home, but that does not make the full cost deductible.

Phone And Internet Claims Need A Reasonable Work-Use Basis

Phone and internet costs are common, but they are rarely 100% work-related.

A home internet plan may be used by the whole household. A mobile phone may be used for work calls, business emails, banking, family messages, social media, maps, photos and personal browsing.

If you are claiming these costs outside a method that already includes them, you need a reasonable work-related basis.

That may involve reviewing:

• itemised bills
• work call records
• data use
• days worked from home
• business versus private use
• whether the employer or company reimbursed any amount
• whether the fixed rate method already covers the cost

The most important point is that the percentage should be explainable.

A claim that says “80% business” without evidence can be hard to support. A lower, better-documented percentage is usually safer than a high number chosen solely to produce a larger refund.

Do Not Claim Costs Someone Else Paid

You generally cannot claim a deduction for an expense you did not incur.

If your employer reimbursed you, or the company paid the cost directly, claiming the same cost personally can create a problem.

This comes up often when people work from home and receive:

• an employer allowance
• reimbursement for internet or phone
• a laptop supplied by work
• equipment paid for by the company
• software subscriptions covered by the employer
• a company-paid mobile phone
• business costs reimbursed after purchase

The treatment depends on the arrangement.

An allowance may need different handling from a reimbursement. A company-owned item may not be included in an individual’s personal deduction claim. A director using company equipment at home may need to review the company records rather than simply claim it personally.

This is why I like to check who paid for the expense before deciding where the claim belongs.

Working From Home For A Side Business

Many Sydney workers now have more than one income stream.

You might be an employee during the week and run a side business from home at night. You might consult, sell online, run a creative business, do contract work, manage investment activity or build a startup from the spare room.

That can make working-from-home claims more complicated.

A cost may relate partly to employment, partly to business and partly to private use. The records need to be separated properly.

For example:

• internet may support employment work, the side business and private household use
• a laptop may be used for employment, invoicing and personal browsing
• a room may be used for business admin but not exclusively
• software may be used for the side business but not employment
• a phone may receive work calls, customer calls and private calls

The claim should match the activity.

If the side business is becoming more than a small extra income stream, it may also raise questions about GST, BAS, bookkeeping, and structure. My page on  accountants for startups in Sydney may be useful if the home-based activity is starting to become a real business.

Home-Based Business Claims Need Better Systems

A home-based business should not treat every household expense as a business cost.

It needs a system.

The ATO’s  guidance on home-based business expenses for sole traders and partnerships explains how running and occupancy expenses can be considered for business-use areas of the home.

For a business owner, I usually want the records to show:

• what part of the home is used for business
• whether the area has the character of a place of business
• which expenses relate to running the business
• whether household expenses need apportionment
• whether occupancy expenses are being considered
• whether private use is removed
• whether GST credits are relevant
• whether the business structure affects the claim
• whether there may be capital gains tax consequences

The words “home office” can cover very different situations.

A desk in the lounge room is not the same as a dedicated consulting room. A business storing stock at home is not the same as an employee answering emails after hours. An online store packing orders from a garage is not the same as a salaried worker attending video calls from a spare bedroom.

A home-based business claim should be built on facts, not on a generic percentage.

Watch The Capital Gains Tax Issue

Home-based business claims can sometimes create future tax consequences.

If you claim occupancy expenses for an area of your home used as a place of business, this may affect the main residence exemption from capital gains tax when the property is later sold.

This is why I do not like treating occupancy expenses as a quick win.

A deduction now may create a question later.

Before claiming occupancy expenses, a Sydney homeowner should understand:

• whether the home is partly being used as a place of business
• whether the area is clearly separate or identifiable
• how long the area has been used for business
• whether occupancy expenses are being claimed
• whether records are being kept for future CGT calculations
• whether the deduction is worth the possible future tax complexity

If the property is rented, different issues may apply, but the claim still needs proper support.

This is an area where tax advice should be specific to the property, use, structure and records.

A Cleaner Record Habit For Working From Home Claims

Working-from-home claims become easier when records are kept during the year.

A practical system might include:

• keeping a diary, calendar or timesheet of hours worked from home
• saving electricity, internet and phone bills
• keeping invoices for office equipment
• recording work-use percentages while they are fresh
• separating employment work from business activity
• noting any reimbursements from an employer or company
• storing software and subscription invoices
• keeping floor-area calculations only where relevant
• reviewing claims before the return is prepared
• asking before claiming occupancy expenses

The record habit does not need to be complicated. It needs to be sufficiently consistent for the claim to be explained.

If the records are scattered across emails, receipts, cards and software, my page on  data entry accountant in Sydney explains how loose financial information can be brought into the accounting file more carefully.

Quick Examples Of Claims That Need Caution

Some working-from-home costs appear claimable at first glance but require further review.

Examples include:

• a full internet bill where the whole household uses the service
• rent claimed by an employee working hybrid days
• a desk used for work, study and personal use
• a phone plan with no work-use evidence
• electricity claimed without records of hours worked
• equipment bought by an employer but claimed personally
• home office furniture used by multiple family members
• occupancy costs claimed for a room that is not genuinely a place of business
• a fixed rate claim plus separate claims for costs already covered by that fixed rate
• business-use claims with no separation from private use

These are not automatic “no” answers. They are “check before claiming” items.

Where Rafal Fits Into The Claim

Working-from-home claims are easy to underestimate because the amounts can seem ordinary.

Internet. Electricity. Phone. Desk. Chair. Laptop. A few hours each week.

But the tax result depends on method, evidence, reimbursement, employment status, business structure and private use.

I’m Rafal Slowinski, Director of Tax Accounting Group Pty Ltd. My background in accounting and tax law helps me look at the claim from both sides: what the rules allow and what the records can support.

For some clients, the answer is a simple, fixed-rate claim with proper hours. For others, the home office connects with a business, company, GST, equipment, occupancy expenses or capital gains tax question.

The claim should be as simple as the facts allow, but no simpler.