How to Claim Home Office Expenses in 2025: Rules, Tips & Updates

The Australian work landscape has shifted dramatically, with remote and hybrid work now a staple across industries. As we settle into 2025, it’s more important than ever for Australians to understand the rules around claiming home office expenses—especially with the ATO’s updated guidance and deduction methods. Whether you’re a salaried employee, freelancer, or small business owner, knowing what you can (and can’t) claim could make a substantial difference to your next tax return.

What’s New for 2025: ATO Changes and Deduction Methods

The Australian Taxation Office (ATO) updated its guidance for home office expense claims in early 2025, following the end of temporary COVID-era arrangements. Here’s what’s changed:

• Revised Fixed Rate Method: From 1 July 2024, the fixed rate method is now 88 cents per hour worked from home, up from 67 cents. This covers electricity, internet, phone, stationery, and computer consumables—but not depreciation of office furniture or equipment.
• Requirement for Detailed Records: The ATO now expects a continuous 4-week diary as proof of working from home hours, plus records of actual expenses for depreciation claims.
• Direct Deductions Still Available: You can still claim a proportion of actual expenses if you have a dedicated home office and detailed receipts.

These updates are designed to streamline claims and reduce errors, but they also mean less flexibility for ad hoc or occasional remote work.

What Can You Actually Claim?

Understanding what’s claimable—and what’s not—can prevent costly mistakes. Here’s a breakdown:

• Claimable (with records):
  • Electricity and gas for heating, cooling, and lighting your workspace
  • Internet and phone costs (apportioned for work use)
  • Stationery and office supplies
  • Depreciation of office equipment (desks, chairs, computers, monitors)
  • Cleaning costs for your dedicated home office
• Not claimable:
  • Rent or mortgage interest (unless you’re running a business from home and meet strict criteria)
  • Rates and insurance (for employees)
  • Snacks, coffee, or personal expenses
  • Childcare or schooling costs

For those using the fixed rate method, you can still claim depreciation separately—so keeping receipts for big-ticket items like a new ergonomic chair or monitor is worthwhile.

How to Maximise Your Deduction (and Avoid ATO Red Flags)

ATO data matching and audit activity have ramped up in 2025, particularly targeting home office claims. Here’s how to get your claim right:

• Keep a 4-week diary of your home office hours—don’t rely on guesswork. Calendar entries or work system logs help back this up.
• Retain receipts for all expenses, including internet bills, stationery, and equipment purchases. Digital copies are fine.
• If using the actual cost method, calculate the work-related proportion of each bill. For a dedicated office, floor space can be used as a guide (e.g., 10% of your home’s area).
• Don’t double dip: If you use the fixed rate method, you can’t also claim running costs it covers, but you can claim depreciation on assets.

Example: Sarah, an IT consultant, works from home three days a week in a dedicated study. She uses the new fixed rate method for running costs, but also claims depreciation on her $2,000 standing desk and $1,200 monitor. By keeping a work diary and receipts, she maximises her return while staying within the rules.

Special Scenarios: Hybrid Work, Business Owners, and Shared Spaces

The ATO’s approach varies depending on your work situation:

• Hybrid workers (mix of home and office): Only claim for actual hours worked at home. The fixed rate covers both salaried and contract workers.
• Small business owners: If your home is your principal place of business, additional expenses (like a share of rent, mortgage interest, rates) may be claimable. Strict substantiation rules apply.
• Shared or non-dedicated spaces: If you work from the kitchen table, you can still claim—but not for cleaning or depreciation of furniture. Only claim the portion of costs directly related to work.

Keep in mind that substantial home-based business claims can impact your capital gains tax (CGT) exemption if you sell your home, so weigh the long-term impact before lodging large claims.

The Bottom Line

Home office expenses remain a valuable deduction for millions of Australians, but the rules are tighter than ever in 2025. By understanding the revised ATO methods, keeping meticulous records, and only claiming what you’re entitled to, you’ll avoid unwanted attention and get the most from your tax return. As remote work continues to evolve, staying on top of these changes will ensure your home office works as hard for you as you do for it.