What Was the COVID Work From Home Tax Deduction?

During the COVID-19 pandemic, the Australian Taxation Office (ATO) introduced a temporary shortcut method to make it easier for Australians working from home to claim tax deductions. From 1 March 2020 to 30 June 2022, you could claim 80 cents per hour for every hour you worked from home, without needing to calculate individual expenses.

This simplified approach was designed to support the rapid shift to remote work during lockdowns. The 80 cents per hour covered all your running expenses including electricity, gas, internet, phone usage, and the decline in value of office furniture and equipment. Unlike the current fixed rate method, you couldn't claim any additional separate deductions — the 80 cents was an all-inclusive rate.

The COVID shortcut method was extremely popular. According to ATO data, over 5 million taxpayers claimed work-from-home deductions during the pandemic peak. The total deductions claimed exceeded $8 billion in the 2020-21 income year alone. If you need help understanding how these deductions fit into your overall income tax position, our tax calculator can help you model different scenarios.

COVID Shortcut Method vs Current 67 Cents Method

The COVID-era shortcut method and the current fixed rate method have important differences. Understanding them helps you choose the right approach for your circumstances. The table below compares the key features of each method.

The key difference is flexibility. Under the current 67 cents method, you can claim additional expenses like your internet bill, mobile phone costs, and stationery separately. This often results in a higher total deduction than the flat rate alone, especially for heavy internet users or those who purchased equipment during the year.

However, the actual cost method is also available if you prefer to calculate your exact expenses. This involves tracking your actual electricity, gas, internet, and phone usage, plus the depreciation of home office furniture and equipment. This approach can be more beneficial if your actual costs significantly exceed the fixed rate calculation.

Can You Still Claim COVID-Era Deductions?

If you worked from home during the pandemic but forgot to claim your deductions, you can still amend your past tax returns. The ATO allows you to lodge an amended return within two years of the original lodgement date. For most taxpayers, this means you can still amend returns for the 2020-21, 2021-22, and 2022-23 financial years.

To claim the COVID shortcut method (80 cents per hour) on an amended return, you need evidence of your work-from-home hours. Acceptable records include a diary, timesheet, or roster that shows the hours you worked from home during the relevant period. You don't need receipts for individual expenses because the 80 cent rate was all-inclusive.

For the 2022-23 financial year, the 67 cents per hour fixed rate method applies (introduced from 1 July 2022). If you're amending your 2022-23 return, you can choose between the fixed rate method and the actual cost method. Unlike the COVID shortcut, you'll need records for any additional expenses you claim separately.

When amending returns, remember that any changes to your taxable income can affect related calculations. For example, higher deductions reduce your income for Medicare Levy purposes. They can also affect your superannuation if you're eligible for government co-contributions.

What Running Expenses Can You Claim in 2025-26?

For the current 2025-26 financial year, working from home deductions are claimed under the revised fixed rate method. The 67 cents per hour rate covers specific running expenses. Understanding exactly what's included helps you maximise your claim without triggering an ATO audit.

The 67 cents per hour covers the following expenses: electricity and gas for heating, cooling, and lighting your home office area; the decline in value (depreciation) of home office furniture such as desks, chairs, and bookshelves; and the cost of repairing home office furniture and equipment. These are considered shared costs that are hard to allocate precisely.

Separately, you can claim: the work-related portion of your internet connection costs (based on usage); the work-related portion of your mobile phone and landline expenses; stationery and computer consumables (printer ink, paper, etc.); and the decline in value of work-related technology like laptops, tablets, monitors, and printers. For technology items costing $300 or less, you can claim an immediate full deduction.

To claim these separate expenses, you need receipts or bank statements. For shared costs like internet and phone, you also need a reasonable basis for apportionment. A three-month representative diary showing your work versus personal usage is the ATO's preferred method. For your take-home pay, maximising legitimate deductions can meaningfully reduce your taxable income.

Record Keeping Requirements for 2025-26

The ATO has strengthened record-keeping requirements for work-from-home deductions. From 1 July 2023, you need to keep a record of the actual hours you worked from home. This can be a timesheet, roster, diary, or any other document that shows your work patterns. The ATO recommends keeping a diary for a representative four-week period each year.

For the fixed rate method, you only need the hour records plus receipts for any separately claimed expenses. You do not need to keep records of how you calculated your hours if you use a timesheet system. Simply multiply your total hours by 67 cents to get your base deduction.

For the actual cost method, you need more detailed records. You must calculate the actual electricity and gas costs for your home office area. This usually involves measuring the floor area of your home office as a percentage of your home, then applying that percentage to your total energy bills. You also need receipts for all expenses you claim separately.

It's worth using our income tax calculator to see how different deduction levels affect your overall tax position. The calculator shows you exactly how much tax you'd save from additional deductions, helping you decide which claiming method works better for you.

ATO Compliance on Work From Home Claims

The ATO continues to scrutinise work-from-home deductions closely. In the 2023-24 compliance program, the ATO identified work-from-home claims as a high-risk area, particularly for claims exceeding $1,000 without adequate records. Random audits of work-from-home claims found that approximately 20% of claims required adjustment.

To avoid triggering an ATO audit, ensure your claims are reasonable and well-documented. If you claim the fixed rate method, keep a clear record of your hours. If you claim additional expenses, keep all receipts and a reasonable basis for apportionment. The ATO accepts a four-week representative diary as evidence of your work-from-home pattern for the full year.

Common red flags include claiming more than 2,000 hours per year (equivalent to working from home 40 hours per week for 50 weeks), claiming the full cost of technology items without adjusting for personal use, and claiming the same expenses under both the fixed rate and actual cost methods. Our salary sacrifice calculator can help you understand how salary packaging interacts with your work-from-home deductions if you're considering that option.

Self-Employed and Business Work From Home Claims

If you're self-employed or running a business from home, different rules apply. Instead of claiming a fixed rate per hour, you claim actual business expenses as deductions against your business income. This includes a portion of your home running costs, calculated based on the floor area used for business.

For self-employed individuals, the home office deduction is calculated by determining the floor area of your dedicated home office as a percentage of your total home, then applying that percentage to your council rates, mortgage interest or rent, home insurance, and cleaning costs. You can also claim the full cost of business-specific expenses like equipment, software, and supplies.

If you use part of your home for both personal and business purposes, you must apportion expenses reasonably. The ATO accepts the floor area method as standard, but you can also use time-based apportionment if it better reflects your actual usage. For business owners, understanding the full picture of your superannuation obligations alongside your home office deductions is important for proper financial planning.

Frequently Asked Questions

Can I still use the 80 cents COVID shortcut method?

No. The COVID shortcut method of 80 cents per hour ended on 30 June 2022. For current and future returns, you must use the 67 cents per hour fixed rate method or the actual cost method. The COVID shortcut can only be used for returns covering periods up to 30 June 2022.

What records do I need to claim work-from-home deductions?

You need a record of your actual hours worked from home (timesheet, diary, or roster). For the fixed rate method, you also need receipts for any separately claimed expenses like internet or phone. For the actual cost method, you need receipts for all expenses and documentation of your apportionment method.

Can I claim a home office if I only work from home occasionally?

Yes, you can. The ATO does not require a dedicated home office for work-from-home claims. You can claim the hours you actually work from home, even if it's only a few days per week. Simply multiply your actual work-from-home hours by the appropriate rate.

What's the maximum I can claim without being audited?

There is no official maximum, but claims over $1,000 attract closer ATO scrutiny. The key is having proper records, not the dollar amount. A well-documented claim of $2,000 is safer than an undocumented claim of $500. Always keep timesheets and receipts for your work-from-home expenses.

Can I claim both the fixed rate and actual expenses?

No, you must choose one method. The fixed rate (67 cents per hour) covers certain expenses, and you can claim some additional expenses separately. The actual cost method covers everything but requires detailed calculations. You cannot use both methods for the same period.