Published: 27 March 2026 | FY 2025-26

67 Cents Per Hour Work From Home: Your Complete Guide to the ATO Fixed Rate Method

If you're one of the millions of Australians working from home, you've probably wondered how to claim tax deductions for all those extra costs you're incurring. The good news is that the Australian Taxation Office (ATO) has made claiming work from home expenses simpler than ever with the 67 cents per hour fixed rate method. This streamlined approach allows you to claim a fair deduction for your home office running costs without the hassle of tracking every single receipt or calculating complex apportionment percentages.

The 67 cents per hour rate has become the go-to method for many Australian workers since the ATO introduced it as a permanent fixture in the tax system. Whether you're working from home full-time, part of the week, or just occasionally, understanding how this method works can help you maximise your tax refund while keeping your record-keeping simple and stress-free. In this comprehensive guide, we'll walk you through everything you need to know about claiming work from home deductions at 67 cents per hour for the 2025-26 financial year, from understanding what expenses are covered to calculating your total claim and avoiding common mistakes.

What Is the 67 Cents Per Hour Fixed Rate Method?

The 67 cents per hour fixed rate method is a simplified approach introduced by the ATO to help Australian workers claim deductions for expenses incurred while working from home. Under this method, you can claim 67 cents for every hour you work from home during the financial year. This single rate covers multiple expense categories, bundling them together into one straightforward calculation that significantly reduces your record-keeping burden compared to the actual cost method.

What makes this method particularly attractive is the breadth of expenses it encompasses. The 67 cents per hour rate includes electricity and gas costs for lighting, heating, cooling, and powering your work equipment. It also covers phone and internet usage, stationery and computer consumables like printer ink and paper, and the decline in value (depreciation) of office furniture such as desks, chairs, and bookshelves. This comprehensive bundling means you don't need to calculate separate deductions for each of these categories—your hourly rate covers them all.

However, it's crucial to understand what the 67 cents per hour rate does not cover. The method specifically excludes the decline in value of computers, laptops, and other electronic devices—you can claim these separately. It also excludes repairs and maintenance of these technology assets, cleaning costs for dedicated home office spaces, and occupancy expenses like rent, mortgage interest, or council rates. Being clear on these exclusions ensures you don't miss out on additional deductions you're entitled to claim separately.

Who Can Use the 67 Cents Per Hour Method?

The 67 cents per hour method is available to a wide range of Australian workers who perform their duties from home. This includes full-time remote employees who work exclusively from a home office, hybrid workers who split their time between home and a traditional workplace, freelancers and contractors running their businesses from home, and even employees who occasionally work from home to catch up on tasks or meet deadlines. The key requirement is that you're genuinely performing work activities from your home, not just checking emails occasionally.

To use this method, you must meet three fundamental conditions set by the ATO. First, you must be working from home to fulfil your employment duties or run your business—personal admin or occasional email checking doesn't qualify. Second, you must have incurred additional running expenses as a result of working from home. Third, you must keep appropriate records to substantiate your claim, which we'll discuss in detail shortly. The method is designed to be accessible to anyone who legitimately works from home, regardless of whether you have a dedicated home office or work from your kitchen table.

One important consideration is that you can switch between the fixed rate method and the actual cost method from year to year based on what works best for your situation. For example, if you have a year with minimal work-from-home hours and low additional expenses, the 67 cents per hour method offers simplicity. In a year where you've set up a dedicated home office with significant expenses, the actual cost method might yield a larger deduction. The flexibility to choose each financial year means you can optimise your tax position without being locked into a single approach.

How to Calculate Your Work From Home Deduction

Calculating your deduction using the 67 cents per hour method is refreshingly straightforward. You simply multiply the number of hours you worked from home during the financial year by 67 cents. For example, if you worked from home for 20 hours per week for 48 weeks of the year, your calculation would be: 960 hours × $0.67 = $643.20 in deductions. This amount is then claimed on your tax return, reducing your taxable income and ultimately your tax liability.

The key to maximising your claim while staying compliant is accurate record-keeping of your hours. The ATO requires you to keep a record of all the hours you work from home throughout the year. This can take several forms: a diary or timesheet showing the dates and hours worked, a roster or work schedule, or time-tracking records from employer systems. The critical point is that estimates or reconstructed records are not acceptable—you need contemporaneous documentation created at the time you were working. A simple spreadsheet or calendar entries noting your work-from-home hours each day will suffice.

Note: Tax savings calculated using the 30% marginal tax rate (applies to income between $45,001 and $135,000 in FY 2025-26), excluding the 2% Medicare levy.

Additional Deductions You Can Claim Separately

While the 67 cents per hour method covers many home office running expenses, savvy taxpayers know there are additional deductions available beyond this fixed rate. Understanding what you can claim separately allows you to maximise your total work-from-home deduction and potentially boost your tax refund significantly.

Technology and equipment represent the biggest opportunity for additional deductions. Computers, laptops, tablets, monitors, printers, and other electronic devices used for work are not covered by the 67 cents per hour rate. For items costing $300 or less, you can claim the full amount as an immediate deduction in the year of purchase. For more expensive items, you'll need to depreciate them over their effective life according to ATO guidelines. For example, a laptop costing $1,500 might be depreciated over three years, giving you a $500 deduction each year plus the 67 cents per hour for your running costs.

Other separately claimable expenses include repairs and maintenance on your work equipment, cleaning costs specifically for a dedicated home office space, and any items your employer requires but doesn't provide. If you've purchased ergonomic accessories like a keyboard, mouse, laptop stand, or footrest specifically for work use, these can be claimed immediately if under $300 or depreciated if more expensive. Don't forget about work-related subscriptions, software licences, and professional development courses—these are all deductible in addition to your 67 cents per hour claim.

It's also worth noting that the 67 cents per hour method doesn't cover all types of phone and internet expenses in every situation. While it covers general usage, if you have significant work-related phone or internet costs beyond typical levels, or if you purchased a new modem or upgraded your plan specifically for work purposes, these may warrant separate consideration. Check our income tax calculator to see how these additional deductions could impact your overall tax position for the 2025-26 financial year.

Record-Keeping Requirements for the 67 Cents Per Hour Method

The ATO has specific record-keeping requirements for the 67 cents per hour method that you must follow to substantiate your claim. While these requirements are less burdensome than those for the actual cost method, they're still essential for compliance and audit protection. Understanding exactly what records you need will save you stress at tax time and ensure you can defend your claim if questioned.

For the 2025-26 financial year onwards, you need to keep a record of all the hours you work from home throughout the year. This is a change from previous years when a representative four-week diary was acceptable—the ATO now requires contemporaneous records covering the entire period. Acceptable records include timesheets, rosters, work schedules, calendar entries, or a simple diary noting the dates and hours worked each day. If you use time-tracking software for your employer, these records are perfect for substantiating your claim. The key is that the records must be created at the time you're working, not reconstructed later.

In addition to your hours record, you must keep at least one document for each type of expense covered by the fixed rate method. This means you need at least one electricity bill, one phone bill, and one internet bill to show that you incurred these types of expenses. You don't need to keep every bill for the entire year—just one of each type is sufficient. However, if you're claiming additional deductions for technology or equipment separately, you'll need to keep all receipts for those purchases. The ATO can review your records for up to five years after you lodge your tax return, so organise and store them securely in digital or physical form.

How the 67 Cents Per Hour Method Affects Your Tax

Understanding how work-from-home deductions flow through your tax calculation helps you appreciate their real value. Deductions reduce your taxable income, which means you pay less tax. The exact savings depend on your marginal tax rate, which for the 2025-26 financial year ranges from 0% for income under $18,200 to 45% for income over $190,000. Most Australian workers fall into the 30% bracket (for income between $45,001 and $135,000), meaning every dollar claimed as a deduction saves 30 cents in income tax.

However, it's important to understand that the Medicare levy also applies to most taxpayers at a rate of 2% of taxable income. This means that for someone in the 30% tax bracket, a work-from-home deduction actually saves 32 cents per dollar claimed (30% income tax + 2% Medicare levy). For higher income earners who face the 37% or 45% marginal rates, the savings are even greater. You can use our take-home pay calculator to model exactly how different deduction scenarios would affect your net income.

One important limitation to understand is that work-from-home deductions, including those claimed at 67 cents per hour, don't reduce your income for all purposes. If you have a HECS-HELP debt, the ATO calculates your repayment income by adding back certain deductions to your taxable income. This means your home office deductions won't reduce your compulsory HECS repayments. Similarly, deductions don't affect the income thresholds used to determine liability for the Medicare Levy Surcharge or eligibility for certain government benefits. For a complete picture of how deductions interact with these obligations, consider using multiple calculators including our superannuation calculator and salary sacrifice calculator.

Fixed Rate vs Actual Cost: Which Method Is Better?

While the 67 cents per hour method offers simplicity, it's not always the best choice for everyone. Comparing it with the actual cost method helps you determine which approach will maximise your deduction for your specific circumstances. The right choice depends on your work-from-home frequency, your actual expenses, your record-keeping preferences, and whether you have a dedicated home office space.

The fixed rate method typically works best for workers with moderate work-from-home hours who value simplicity. If you work from home one to three days per week and don't have unusually high home office costs, the 67 cents per hour rate is likely to provide a fair deduction with minimal effort. It's also ideal if you don't have a dedicated home office space and work from various locations around your home, as calculating actual costs without a defined workspace is challenging.

The actual cost method may be more advantageous if you have a dedicated home office used exclusively for work, if you incur significant additional expenses beyond typical levels, or if you work from home full-time with correspondingly high utility costs. This method requires detailed record-keeping and calculations but can result in larger deductions in the right circumstances. Some taxpayers even find that a hybrid approach works best—using the 67 cents per hour rate as a base and then claiming certain large expenses (like a new computer) separately.

Common Mistakes to Avoid

The ATO pays particular attention to work-from-home deductions, and errors in this area can trigger reviews or audits. Avoiding common mistakes not only keeps you compliant but also ensures you claim everything you're entitled to without overstepping the boundaries. Here are the key pitfalls to watch out for when using the 67 cents per hour method.

The most common mistake is claiming hours that don't qualify. You can only claim hours when you're actually performing work activities from home—checking emails occasionally in the evening or doing personal admin doesn't count. Similarly, you can't claim for lunch breaks or time when you're on personal calls even if you're "at work" in your home office. Another frequent error is claiming the 67 cents per hour rate and then trying to also claim for expenses already covered, like electricity or internet usage, which constitutes double-dipping.

Don't fall into the trap of estimating your hours or keeping insufficient records. The ATO no longer accepts estimates or sample diary periods—you need actual contemporaneous records. Also be careful not to claim occupancy expenses like rent or mortgage interest unless you have a dedicated home office used exclusively for work and are prepared to accept potential capital gains tax consequences. Finally, never claim expenses that your employer has already reimbursed—that's not only incorrect but easily detected through data matching.

Summary: Making the Most of the 67 Cents Per Hour Method

The 67 cents per hour fixed rate method offers Australian workers a simple, effective way to claim tax deductions for work-from-home expenses in the 2025-26 financial year. By covering electricity, gas, phone, internet, stationery, and furniture depreciation in one bundled rate, this method significantly reduces record-keeping while still providing a fair deduction. For many workers, particularly those with moderate work-from-home arrangements, this approach strikes the perfect balance between compliance simplicity and tax optimisation.

To maximise your benefit from this method, start by keeping accurate records of your work-from-home hours from day one of the financial year. Consider what additional deductions you can claim beyond the fixed rate—technology, equipment, and work-related subscriptions can substantially boost your total claim. Compare the fixed rate method against the actual cost method to ensure you're using the approach that delivers the best outcome for your situation. And remember that deductions reduce your taxable income, providing valuable tax savings that increase with your marginal tax rate.

Whether you're a full-time remote worker, a hybrid employee splitting time between locations, or an occasional home worker, understanding and correctly applying the 67 cents per hour method ensures you get the tax refund you deserve while staying on the right side of the ATO. To see exactly how work-from-home deductions affect your overall tax position, explore our suite of free Australian tax calculators. Our take-home pay calculator and income tax calculator can help you model different scenarios and plan your finances for the 2025-26 financial year.