Claiming Home Office Expenses: Post-Financial Year Considerations
As the end of the financial year has just passed, Australian business owners now need to turn their attention to a critical task: claiming home office expenses. With remote work continuing to shape the landscape of modern business, understanding how to navigate the ATO’s guidelines on home office deductions is crucial. In this guide, we explore the two methods recognised by the ATO to calculate your claim and maximise your tax deductions: the Fixed Rate Method and the Actual Cost Method.
Are you eligible to claim?
Before you put in the hard work to claim working from home expenses, you need to find out if you are eligible to make a claim. To be eligible, you must:
- Be working from home to fulfil your employment duties, i.e., not just answering occasional emails and phone calls.
- Incur additional expenses as a result of working from home.
- Keep records that show you incur the expenses.
1. The Fixed Rate Method
The Fixed Rate Method is a straightforward way to calculate your home office expenses. You can claim 67 cents per hour for every hour worked from home, covering additional expenses such as heating, cooling, lighting and internet or data expenses.
Advantages:
- Simplicity. Requires minimal record-keeping—just track your hours worked from home.
- Multiply your total hours worked from home by the applicable rate to determine your deduction.
Considerations:
- Ensure you have accurate records of your hours worked from home to support your claim. A log for the year must be kept of the hours worked.
- A separate system is required to claim expenses not covered by the fixed rate, such as the decline in value of depreciating assets (like home office furniture).
- This method is ideal for those who prefer a simplified approach to claiming home office expenses without the need for detailed expense tracking.
2. The Actual Cost Method
- Alternatively, the Actual Cost Method allows you to claim the actual expenses incurred while working from home. This includes:
- Utilities: Proportion of electricity and gas bills attributable to your home office.
- Internet and Phone: Costs related to work-related use of internet and phone services.
- Depreciation: Decline in value of home office equipment and furniture.
Advantages:
- Precision: Claim expenses based on actual costs incurred, potentially maximising your deduction if your home office expenses exceed the fixed rate.
- Flexibility: Suitable for those with higher-than-average home office expenses or specific equipment depreciation needs.
Considerations:
- Requires detailed record-keeping and documentation of all expenses claimed.
- Keep invoices, receipts, and records that clearly demonstrate the connection between expenses and your work activities.
Consult the experts
In order to ensure that you are maximising your tax return, consult an expert like Ascent Accountants. Our team offers a comprehensive suite of services that go beyond the scope of a traditional accountant role. We provide active partnership in your business journey.
Successfully preparing your home office expense claims post-financial year hinges on careful consideration and adherence to ATO guidelines. By selecting the appropriate method—whether Fixed Rate or Actual Cost—and partnering with seasoned professionals like Ascent Accountants, you ensure your claims are precise, compliant, and optimised for maximum tax benefits. Contact us today to explore how we can assist in achieving your financial objectives and steer your business towards continued growth and success.
Need help with your accounting?
From 1 July 2025, interest on ATO tax debts won’t be deductible. This could add big costs—but smart planning now can ease the cash flow hit.
ATO is targeting WFH claims, car deductions, rental expenses & crypto. Our blog shows how to maximise deductions legally & avoid penalties.
Selling in 2025? Small details can make or break your price—but most pitfalls are avoidable. Read our blog to boost your property’s value.
If your business provides a car to an employee (or you’re the business owner/employee using it), there’s a good chance the Fringe Benefits Tax (FBT) rules apply. A car fringe benefit arises when a car owned or leased by an employer is made available for the private use of the business owner, an employee or their associate (such as a family member). “Private use” doesn’t just mean weekend road trips — it can include everyday commuting and even cases where the car is parked at an employee’s home, making it available for personal trips. Understanding how FBT is calculated and what records to keep is essential for compliance — and for avoiding paying more tax than necessary. What counts as a “car” for FBT purposes? The FBT law defines a car as a motor vehicle (except a motorcycle or similar) designed to carry less than one tonne and fewer than nine passengers. From 1 July 2022, some zero or low-emission vehicles are exempt from FBT, provided they meet certain criteria — for example, they must be first held and used after 1 July 2022 and must not have attracted Luxury Car Tax. Electric vehicle running costs, such as charging, are also exempt when the vehicle itself qualifies. Two main methods for calculating FBT on cars There are two ways to calculate the taxable value of a car fringe benefit. 1. Statutory formula method This method applies a flat 20% statutory rate to the base value of the car, adjusted for the number of days in the FBT year the car was available for private use. The formula is: (A × B × C ÷ D) − E A = Base value of the car (cost price plus GST and certain accessories, less registration, stamp duty and eligible reductions) B = Statutory fraction (generally 20%) C = Days available for private use D = Total days in FBT year (365) E = Employee contributions If the car has been owned for at least four full FBT years, the base value can be reduced by one-third. 2. Operating cost method This method calculates the taxable value by applying the private use percentage to the total operating costs of the car (actual and deemed costs). The formula is: Taxable value = [Operating costs × (100% − Business use %)] − Employee contributions Operating costs include: Fuel, oil, repairs, maintenance, registration and insurance Lease costs (for leased cars) Deemed depreciation (25% diminishing value) and deemed interest for owned cars Certain costs, such as tolls, car parking and insurance-funded repairs, are excluded. The business use percentage is determined by odometer readings, logbook records, and a reasonable estimate based on usage patterns. The three-month logbook requirement (operating cost method only). If you use the operating cost method, you must keep a logbook for at least 12 continuous weeks (roughly three months) to record: The date of each trip Odometer readings at the start and end Total kilometres travelled Whether the trip was for business or private purposes The purpose of each business trip This logbook is generally valid for five years, but you must start a new one if usage patterns change significantly (e.g., a role change, relocation or different duties). You also need to record odometer readings at the start and end of each FBT year. Why record-keeping matters. Keeping accurate records can support a higher business use percentage (and therefore a lower FBT bill). They also ensure you claim only legitimate business kilometres and help you provide evidence if the ATO reviews your FBT calculation. Finally, your records help you decide which calculation method (statutory or operating cost) is more tax-effective. Key takeaways for businesses and employees. If a car is available for private use, FBT may apply — even if the car isn’t driven often for personal trips. Electric cars may be FBT-exempt if they meet eligibility criteria, but you may still need to calculate their taxable value for reporting purposes. The operating cost method often works better if business use is high — but only if you have a compliant logbook. Keep odometer readings, expense records and a valid logbook to support your claims. Need help with your FBT obligations? Get it at Ascent Accountants. We guide business owners through every step of FBT compliance — from choosing the right valuation method to maintaining the right records for ATO peace of mind. If you provide cars to employees or use a company vehicle yourself, now is the time to review your FBT position before the next FBT year rolls over. Let’s talk .
Hey FIFO workers. You work hard for your money. Let’s make it work hard for you this EOFY. Tax time it’s your chance to set yourself up for long-term financial security. From deductions and super to loan reviews and goal setting, our FIFO EOFY checklist can help you turn your hard-earned income into lasting wealth.
Zoning can shape your property’s value, development potential and future income. Whether you’re buying, selling or investing in WA, understanding R-Codes is a must. Read the full blog to get the facts.
