Beyond the Basics: Overlooked Tax Deductions for Home Office Expenses in Australia

Beyond the Basics: Overlooked Tax Deductions for Home Office Expenses in Australia

Working from home has become the norm for countless Australians. While most people are now familiar with the ATO’s methods for claiming utility and communication costs, many are missing out on valuable deductions that can significantly boost their tax refund.

At Berzy Chartered Accountants, we see many clients who either under-claim due to confusion or over-claim due to a lack of understanding of the ATO’s compliance rules.

1. The Crucial Distinction: Fixed Rate vs. Actual Cost

The first step to maximising your claim is understanding what each of the two ATO-approved methods covers for the 2024–2025 financial year.

Method	Rate	What the Rate COVERS (Cannot be claimed separately)	What You CAN Claim Separately
Revised Fixed Rate	$0.70 per work hour	Energy (electricity & gas), Internet, Phone (mobile & home), Stationery, Computer Consumables (e.g., printer ink).	Decline in value (depreciation) of assets, Repairs/maintenance, Cleaning of a dedicated work area.
Actual Cost	N/A	N/A – All expenses are calculated and claimed individually.	All running expenses (apportioned for work use), Decline in value (depreciation) of assets, Repairs/maintenance, Cleaning of a dedicated work area.

The “Hidden” Deductions You Can Still Claim Separately

If you opt for the simpler Fixed Rate Method ($0.70/hour), you may think your options are limited, but you can still claim deductions for three key areas on top of your hourly rate:

A. Decline in Value (Depreciation) of Assets

This is the most common and often largest overlooked deduction. The $0.70 per hour rate does not include the cost of your office furniture and equipment.

Asset Type	The Deduction	Key Rule
Furniture	The work-related portion of your desk, office chair, filing cabinets, and bookshelves.	These costs are spread out over the asset’s effective life (depreciation).
Equipment	The work-related portion of your laptop, desktop, monitor(s), printer, or scanner.
Assets Costing < $300	Items costing $\$300$ or less (like a high-quality keyboard, noise-cancelling headphones, or a specialised webcam) can generally be claimed in full in the year you buy them, provided they are mainly used for work.	This is an immediate deduction.

Tip: You must calculate the work-related percentage for each item. An accountant can help you ensure you are correctly calculating the decline in value to maximise your claim

B. Repairs and Maintenance

Did you pay for someone to come out and fix your work-related printer? Did you purchase parts to repair your monitor?

The cost of repairing assets you use for work is deductible. This applies to your computer, monitor, office furniture, or even a specialised piece of equipment essential to your job. Remember to keep all receipts.

C. Cleaning a Dedicated Home Office

If you have a dedicated room set aside solely as an office, you can claim the work-related portion of your cleaning costs.

This includes cleaning expenses like:

A professional cleaner who cleans that specific room.
A reasonable portion of cleaning products or a vacuum cleaner used specifically for the office space.

Important Note: If you work from your kitchen table or a corner of your living room, you generally cannot claim cleaning costs, as the space is not dedicated solely to work.

2. When the “Actual Cost” Method is the Hidden Goldmine

While the Fixed Rate Method is simple, it often provides a smaller deduction. If you have substantial expenses or a high volume of work-related use, the Actual Cost Method may be more beneficial, allowing you to claim expenses the fixed rate absorbs.

The key deductions to look out for with this method are:

A. High-Usage Utilities

If you run high-power equipment (e.g., multiple monitors, a dedicated server, high-end PCs for graphic design/editing) or rely heavily on air conditioning/heating to make your dedicated office space comfortable, the 70 cents per hour may not cover your actual electricity or gas costs.

Claiming Actual Costs: You must keep your utility bills and a record (e.g., a four-week diary) of your actual usage to calculate the work-related percentage.

B. Specialised Software & Subscriptions

These are often missed and are not covered by the 70-cent hourly rate, meaning they can be claimed separately regardless of which method you choose.

Professional Subscriptions: Industry journals, trade magazines, or specialised research databases.
Software Licences: Annual fees for professional software necessary for your job (e.g., Adobe Creative Cloud, specialised engineering tools, or high-level financial analysis platforms).
Cloud Services: Fees for work-related cloud storage (e.g., Dropbox, Google Drive) or backup services.

The Golden Rule: Record Keeping is Non-Negotiable

No matter which method you choose, you must have records to support your claims. The ATO is heavily focused on compliance in this area.

Fixed Rate Method ($0.70/hr): You must have a record (diary, timesheets, calendar) of all the hours you worked from home during the income year, plus proof that you paid the expense (e.g., one bill for electricity and one for internet).
Actual Cost Method: You need receipts or invoices for all expenses claimed and a reasonable calculation showing the work-related portion (e.g., a detailed four-week logbook for internet/phone usage).

Talk to a Berzy Chartered Accountant

Navigating the complexities of home office deductions can feel like a minefield. The biggest mistake is failing to apply the correct methodology to your unique circumstances.

A detailed review by a qualified accountant can identify these hidden deductions, ensure your calculations are ATO-compliant, and ultimately maximise your tax position without attracting unwanted attention.

Don’t leave money on the table. Contact the team at Berzy Chartered Accountants today for a comprehensive tax review.

References

Australian Taxation Office (ATO). (2024). Working from home expenses: Fixed rate method (2024–25). Retrieved from ATO website.
Australian Taxation Office (ATO). (2024). Claiming deductions (2024–25). Retrieved from ATO website.
Australian Taxation Office (ATO). (2024). Working from home expenses: Actual cost method. Retrieved from ATO website.

Disclaimer
The information provided in this blog is intended for general informational purposes only and should not be construed as legal, financial, or business advice. While we strive to provide accurate and up-to-date information, every business and individual’s situation is unique. Therefore, we strongly recommend seeking professional legal or financial advice tailored to your specific circumstances before making any decisions. Relying solely on the content of this blog without expert guidance may expose you to legal or financial risks