Working From Home Tax Deductions 2025–26 | Gold Coast | Homemax Accounting

A lot of Gold Coast business owners assume the working from home deduction is straightforward. You work from home, you claim some expenses, done. But the ATO's rules are more specific than most people realise, and work-related expense claims are the single biggest contributor to Australia's estimated $8.7 billion tax gap. That makes them one of the most scrutinised areas on any tax return.

The good news is that legitimate deductions are absolutely available to you in 2025–26. The key is knowing which method suits your situation, what records you actually need to keep, and where the lines are drawn on what qualifies. Get those three things right and you can claim confidently without any concern about an ATO review.

The 70 Cent Fixed Rate Method

The fixed rate method lets you claim 70 cents for every hour you work from home during 2025–26. That rate covers your electricity and gas, your internet and data costs, your phone usage, and any stationery or computer consumables you use while working. You do not need a dedicated home office to use it. Working from a kitchen table or spare room counts perfectly fine.

The 70 cent rate has been in place since 1 July 2024 and continues for the 2025–26 income year. Before that, the rate was 67 cents for the two preceding years. The increase sounds modest but it adds up over a full year of working from home.

To put a real number on it, say you work from home five days a week for around 46 weeks of the year, averaging seven hours a day. That comes to roughly 1,610 hours. At 70 cents per hour, your deduction for running costs is $1,127 before you add anything for equipment depreciation on top. For many sole traders and contractors, that is a meaningful reduction in taxable income.

What you can still claim separately on top of the 70 cent rate is the decline in value of assets you use for work. This includes computers and laptops, monitors, printers, desks, office chairs, and any other work-related equipment. If a piece of equipment costs under $300 and you use it entirely for work, you can claim the full cost immediately. If it costs more, depreciation applies over the effective life of the asset. And if you are a sole trader or small business eligible for the instant asset write-off before 30 June 2026, assets under $20,000 can be written off in full in this financial year.

The Actual Cost Method

The actual cost method lets you claim the genuine work-related portion of every home running expense rather than applying a flat hourly rate. This involves working out what percentage of your home costs are genuinely attributable to work, and claiming that share directly.

The expenses you can claim under this method include electricity and gas, internet, phone, cleaning of a dedicated work area, and the decline in value of furniture and equipment. If your home is genuinely your principal place of business as a sole trader with no other fixed premises, you may also be able to claim a portion of your occupancy costs such as rent or mortgage interest. That is a significant additional deduction that is not available under the fixed rate method.

The trade-off is the record-keeping. You need receipts and invoices for every expense, a clear calculation of what proportion relates to work versus personal use, and a floor area figure showing what percentage of your home is used for work. For phone and internet, you either need an itemised bill or a four-week representative usage diary to establish your work-use percentage. It is more involved than the fixed rate method, but for business owners with a dedicated workspace and substantial running costs, it can produce a noticeably larger deduction.

The Record-Keeping Rules That Actually Matter

This is where most working from home claims fall apart. Since March 2023, the ATO no longer accepts four-week sample diaries or rough estimates of how many hours you worked from home across the year. You need a record of every actual hour, kept at the time you work it. That means a timesheet, calendar entry, roster, or time-tracking app updated as you go throughout the year.

The ATO has a real-world example on its own website about a taxpayer called Wanda who estimated her hours for the first part of the year and only started keeping proper records partway through. She could only claim for the months where she had contemporaneous records. The hours she estimated were disallowed entirely. It is a simple story with a costly lesson.

Beyond the hours, the fixed rate method also requires at least one bill for each expense category covered by the rate. So if your internet and electricity are bundled into the 70 cent calculation, you need to hold at least one internet bill and at least one electricity bill for the year to show you actually incurred those costs. Under the actual cost method, you need the full set of invoices and receipts for every expense being claimed.

What Does Not Qualify

Just as important as knowing what you can claim is understanding where the ATO draws the line. Some of these catch people out every year.

Expense	Does It Qualify?
Internet claimed separately on top of the 70c fixed rate	No. It is already included in the rate.
Phone claimed separately on top of the 70c fixed rate	No. Same reason. Switch to actual cost if you want to claim it separately.
Coffee, tea, or household groceries	No. General household items are never deductible as working from home expenses.
Children's iPads, desks, or educational subscriptions	No. These are personal costs regardless of when they are used.
Mortgage interest or rent as an employee	No. Occupancy costs are only available if your home is your principal place of business.
Laptop used partly for personal use claimed at 100%	No. Mixed-use assets must be apportioned. The work percentage must be defensible.
Estimated hours instead of actual recorded hours	No. The ATO does not accept estimates under any current method.

A Warning for Homeowners Claiming Occupancy Costs

If you own your home and you claim occupancy expenses as part of your home office deduction, you need to understand the capital gains tax implication before you do it. When you use part of your home to produce assessable income and claim those occupancy costs, your property is no longer fully exempt from CGT when you sell.

The proportion of any capital gain relating to the business use area and period may be taxable. For a property that has grown substantially in value over many years, this could be a significant amount. The deduction you claimed in the meantime needs to be weighed against what it may cost you at sale time.

Running costs such as electricity and internet do not carry the same CGT risk. For most employees and many sole traders, maximising running cost and equipment deductions is the safer approach and often delivers a comparable outcome anyway.

What About the Proposed $1,000 Standard Deduction?

You may have read about a proposed $1,000 standard work-related expense deduction that does not require receipts. Here is the important detail: it applies from the 2026–27 income year onwards. It does not apply to your 2025–26 return. For the current year, you must use either the fixed rate or actual cost method and you must have the records to support your claim.

A Practical Action Plan Before 30 June 2026

"The working from home deduction is one of the most legitimate and available tax breaks for Gold Coast small business owners. The issue is never whether the deduction exists — it is whether the records exist to support it. Start now and you will have nothing to worry about in June."

— Homemax Accounting Team

How We Help at Homemax Accounting

Working from home deductions sound simple on the surface but there are enough moving parts — two methods, mixed-use assets, depreciation calculations, CGT implications for homeowners, and strict record-keeping rules — that getting it completely right on your own is harder than it looks. That is not a sales pitch. It is just the reality of how detailed the ATO's requirements have become since 2022.

Our team works with Gold Coast sole traders, contractors, and home-based business owners throughout the year, not only at lodgement time. We help clients choose the right method, calculate the best outcome, and build record-keeping habits that hold up under scrutiny. If you want to make sure you are claiming everything you are entitled to without overclaiming anything, we are here to help.

You can learn more about our tax return services or bookkeeping support, or simply get in touch and we will take it from there.