What Is the ATO Fixed Rate Method?

The fixed rate method is a simplified way of claiming home office expenses for tax purposes. Introduced by the Australian Taxation Office, it replaces the need to calculate individual running costs like electricity, gas, and furniture depreciation by bundling them into a single hourly rate.

Since 1 July 2023, the rate has been 67 cents per hour (revised from the previous 52 cents and then 80 cents rates). This rate applies to the 2024-25 and 2025-26 financial years and covers the following expenses: electricity and gas for heating, cooling and lighting your home office, the decline in value of your home office furniture and furnishings, and the costs of repairing home office equipment and furniture.

The method is designed to make tax time easier for the millions of Australians who work from home at least some of the time. Instead of tracking multiple expense categories and calculating usage percentages, you simply record your hours and apply the rate.

How to Calculate Your Fixed Rate Method Deduction

Calculating your deduction using the fixed rate method is simple. You need two pieces of information: the number of hours you worked from home during the financial year, and the fixed rate of 67 cents.

The Formula: Total Work From Home Hours × $0.67 = Total Deduction

You can only claim hours that you actually worked from home. The ATO does not allow you to claim time spent on breaks, meal times, or personal activities. It is essential to keep a reliable record of your actual working hours throughout the year.

What the 67 Cents Per Hour Rate Covers

Understanding exactly what the fixed rate includes and excludes is important to avoid claiming incorrectly. The 67 cents per hour rate covers these three categories of expenses.

Energy costs: Electricity and gas for heating, cooling, and lighting the area where you work. This is typically the largest component of the fixed rate. If you use the fixed rate method, you cannot claim individual electricity or gas costs separately.

Furniture depreciation: The decline in value of home office furniture and furnishings, such as desks, chairs, and bookshelves. The fixed rate includes this cost, so you cannot claim a separate deduction for furniture under the actual cost method if you choose the fixed rate method for the same period.

Repair costs: Repairing home office furniture and furnishings. If your office chair breaks and needs fixing, the cost is covered by the fixed rate.

Importantly, the fixed rate does not cover phone and internet expenses, the decline in value of computer equipment, or office stationery and supplies. These can be claimed separately as additional deductions, as long as you have records of your work-related usage.

What You Can Claim Separately

One of the most misunderstood aspects of the fixed rate method is that it does not bundle everything together. You can still claim separate deductions for several important categories of work-from-home expenses.

Phone and internet: You can claim the work-related portion of your phone and internet bills. If you use 40% of your internet for work, you can claim 40% of your total internet costs. For mobile phone plans, you can claim a portion based on your work calls versus personal calls.

Computer and technology depreciation: The decline in value of laptops, desktops, monitors, tablets, printers, and other work-related technology can be claimed separately. Business or professional development HECS-HELP education expenses might also be relevant if you are undertaking study related to your current job.

Stationery and consumables: Printer paper, ink cartridges, pens, and other office supplies used for work purposes can be claimed as separate deductions. Just keep your receipts.

Home office cleaning: If you have a dedicated home office area, you may be able to claim a portion of your cleaning costs. However, the ATO is strict about this, and you need a clear method of apportionment.

Use our Income Tax Calculator to see how these deductions flow through to your final tax outcome.

Fixed Rate Method vs Actual Cost Method

The ATO offers two methods for claiming home office expenses: the fixed rate method and the actual cost method. Choosing the right one depends on your personal circumstances.

For most employees, the fixed rate method is simpler and provides a fair deduction. However, if you have significantly high electricity costs or a large dedicated home office, the actual cost method might give you a larger deduction. You cannot use both methods for the same financial year — you must choose one approach for all your home office claims.

Record Keeping Requirements

The ATO expects you to keep proper records to substantiate your fixed rate method claim. Without these records, your claim may be rejected during an audit or review.

For the fixed rate method, you need: A record of the total number of hours you worked from home during the financial year. This can be a timesheet, diary entries, roster, or a logbook that shows the hours you worked. The ATO recommends keeping a record that covers a representative four-week period if your work patterns are consistent, or a full diary if your hours vary significantly.

For separately claimed expenses (phone, internet, technology): Receipts, invoices, or bank statements showing the cost of each item. For ongoing expenses like phone and internet, you need bills showing the total cost. You also need a record showing how you calculated the work-related portion — for example, three months of phone bills showing work versus personal use.

The ATO has been increasing its scrutiny of work-from-home claims in recent years. In FY 2023-24, the ATO rejected or adjusted millions of dollars in work-from-home claims due to inadequate record keeping. Make sure your records are complete before lodging your return.

How the Fixed Rate Method Affects Your Overall Tax Position

Claiming a deduction through the fixed rate method reduces your taxable income, which in turn affects your overall tax position in several ways.

Lower income tax: A deduction of $1,286 on a $70,000 salary reduces your taxable income to $68,714. At the 30% marginal tax rate, this saves you approximately $386 in income tax. It also reduces your Medicare Levy by $25.72 (2% of $1,286).

Lower HECS-HELP repayment: If you have a HECS-HELP debt, a lower taxable income means a lower compulsory repayment. For someone earning $70,000, the repayment rate is 1% of income above $67,000, so reducing taxable income from $70,000 to $68,714 saves about $12.86 in HECS repayments.

Superannuation: Your employer's superannuation guarantee contributions are based on your gross salary, not your taxable income after deductions, so your super is unaffected by claiming work-from-home deductions.

To see your complete tax picture including all deductions, use our Take-Home Pay Calculator and enter your estimated deductions.

Frequently Asked Questions

Can I use the fixed rate method if I don't have a dedicated home office?

Yes. Unlike the old rules (pre-2022), the revised fixed rate method does not require a dedicated home office area. You can claim for any work done from home, even if you are working at your kitchen table or on your couch. However, you must still be performing actual work duties during the hours you claim.

Can I claim the 67 cents per hour rate for previous years?

No. The 67 cents per hour rate applies from 1 July 2023 onwards. For the 2022-23 financial year, the rate was 52 cents per hour for part of the year and 67 cents for the remainder. For earlier financial years, different rates and rules applied.

Do I need a timesheet to claim the fixed rate method?

Yes. The ATO requires you to keep a record of your hours, which can be a timesheet, a diary, or a roster. A representative four-week diary is acceptable if your work patterns are consistent. The ATO may ask for this record if your claim is reviewed.

Can I claim the fixed rate method and the actual cost method in the same year?

No. You must choose one method for claiming home office expenses in a given financial year. You cannot use the fixed rate method for some months and the actual cost method for others. However, you can switch between methods from one year to the next.

Can I claim phone and internet separately with the fixed rate method?

Yes. Phone and internet expenses are not covered by the 67 cents per hour fixed rate. You can claim these separately based on your work-related usage. Keep your phone and internet bills and calculate the work-related percentage using a diary or apportionment method.

What if I work from home on weekends and public holidays?

Yes, you can claim these hours using the fixed rate method. The ATO does not restrict claiming to standard business hours only. As long as you were genuinely performing work duties, you can claim the time. Make sure your timesheet or diary accurately records these hours.