WFH guide
ATO 70c/hour vs actual-cost WFH records: what to compare
Compare the records behind two common WFH deduction methods before tax time.
Quick checklist
- Calculate total WFH hours for the financial year.
- Estimate actual costs only when you can support the bills and work-use share.
- Keep a note explaining why your percentage is reasonable.
- Ask your accountant which method is appropriate before lodging.
The fixed-rate method is about simplicity
The fixed-rate method multiplies eligible WFH hours by the ATO cents-per-hour rate. It is usually easier to document because the key record is your hours, backed by a roster, diary, timesheet, or similar record.
Worked example: 40 hours a week from home for 48 weeks is 1,920 hours. At 70c/hour, the planning estimate is $1,344 before your accountant checks eligibility and records.
Actual cost is about evidence
Actual-cost records depend on bills, work-use percentages, and a defensible method. Energy, phone, internet, stationery, computer consumables, dedicated office cleaning, and decline in value records can all matter, but only when the work-related portion is supportable.
The bigger number is only better when the evidence is better. TaxBoy helps by keeping the bills, receipts, categories, and notes together before EOFY.
When the higher number is not automatically better
A bigger estimate is only useful if you can back it up. If actual cost depends on scattered bills, rough guesses, or purchases you cannot find anymore, the simpler method may be the smarter path.
Run the calculator for direction, then review your records with ATO guidance or a registered tax agent before deciding what is supportable.
Worked example
Same person, two methods compared
Sam works from home 30 hours a week for 46 weeks of the year. He has the bills and a contemporaneous hours log. The numbers below are illustrative planning estimates only — actual eligibility depends on records and ATO guidance.
- WFH hours recorded— 30 hrs/wk × 46 weeks
- 1,380 hrs
- Method A — Fixed rate (70c/hour)— 1,380 × $0.70 — covers energy, internet, phone, stationery, computer consumables
- $966.00
- Method B — Actual cost (electricity)— Floor area + hours apportionment of $1,400 annual bill
- $210.00
- Method B — Actual cost (internet)— 30% work-use × $89/mo × 12
- $320.40
- Method B — Actual cost (mobile)— 20% work-use × $55/mo × 12
- $132.00
- Method B — Stationery + consumables— Itemised receipts
- $95.00
- Method B subtotal (illustrative)— Before any decline-in-value on assets
- $757.40
On paper, Method A is higher in this case — and the records are simpler. Method B may overtake Method A once decline-in-value on a chair, monitor, or laptop is included. The right method depends on what you can actually evidence; a registered tax agent can review both paths before lodging.
Illustrative example only. Numbers are general information, not personalised tax advice. Check ATO guidance or speak to a registered tax agent before lodging.
Common mistakes to avoid
- Mixing the two methods. You pick one method per income year — you can't claim cents-per-hour and then add internet on top, because internet is already inside the fixed rate.
- Treating actual-cost as automatically better. A larger estimate is only useful if every line is supportable with bills, work-use percentages, and a defensible apportionment method.
- Skipping the WFH hours log when using actual cost. You still need a record of work patterns to apportion energy, internet, and phone costs.
- Using a guessed work-use percentage with no method behind it. The ATO expects a reasonable basis (e.g. weekly hours of work use ÷ total weekly use), not a round number plucked from memory.
Receipts to search for
Frequently asked questions
What does the ATO 70c/hour fixed-rate method cover?
Per ATO guidance, the cents-per-hour rate is intended to cover the running costs of working from home — electricity and gas for cooling/heating/lighting, home and mobile internet, home and mobile phone, and stationery and computer consumables. You can't separately claim those items on top. Capital items like a desk, chair, monitor, or laptop sit outside the rate and may be claimed separately under decline-in-value rules.
Can I switch methods between income years?
Yes. You choose the method that suits your records each year. You can't use both methods in the same income year for the same expenses.
What records do I need for the actual cost method?
Bills for each running expense, a record of WFH hours, evidence of total household use (so you can apportion), receipts for any consumables or assets, and a written explanation of how you calculated the work-use percentage. The ATO calls this a 'reasonable basis' for apportionment.
Do I need a dedicated home office to use either method?
No. Neither method requires a dedicated room. The fixed-rate method specifically removed that requirement. However, claiming occupancy expenses (like rent or mortgage interest) is a separate, much narrower test that usually does require a dedicated work area — and it can have CGT consequences when you sell. Speak to a registered tax agent before going down that path.
Why does my tax agent need the bills if the rate already covers them?
Even under the fixed-rate method, the ATO expects you to show the running expenses were actually incurred — at minimum, one bill per category (electricity, internet, phone) for the year. Forwarding the bills as they arrive avoids a June scramble.
Sources
Last reviewed 29 Apr 2026 by Kalana Vithana. TaxBoy is not a registered tax agent and this article is general information, not tax advice.