WFH Fixed Rate vs Actual Cost Calculator Australia

Comparing the Two ATO WFH Methods

The Australian Taxation Office provides two methods for claiming work from home expenses, and choosing the right one can make a meaningful difference to your tax refund. The fixed-rate method is the simpler approach: you multiply your total hours worked from home by 67 cents per hour. This flat rate covers electricity, gas, phone, internet, stationery, and computer consumables. The advantage of this method is its simplicity; you only need to track your hours, not individual expenses. The disadvantage is that if your actual costs are higher than what the 67 cents per hour would cover, you may be leaving money on the table. The fixed rate is set by the ATO and does not vary based on your actual expenses or the state you live in.

The actual-cost method requires more work but can yield a larger deduction for people with higher running costs. Under this method, you calculate the work-related proportion of each running expense separately. For internet and phone, you determine what percentage of your usage is for work purposes. For electricity and gas, you can use a reasonable basis such as the floor area of your home office compared to the total floor area of your home, multiplied by the hours you use the space for work. Equipment depreciation is calculated based on the effective life of the asset and the percentage of work use. For example, if you purchased a $2,000 laptop and use it 70% for work, you can claim 70% of the annual depreciation amount. Stationery and other consumables are claimed based on actual receipts.

The key to deciding which method suits you is to calculate both and compare them. Workers in areas with high utility costs, those with dedicated home offices, and those who have invested in quality equipment often find the actual-cost method more beneficial. Workers who split their time between home and the office, those with modest expenses, and those who prefer simplicity often fare better with the fixed-rate method. This calculator does the comparison for you by taking your actual expenses and your WFH hours as inputs and showing you the deduction under each method along with a clear recommendation. Remember, you can only use one method for each income year; you cannot mix and match between the two.

What the Fixed Rate Covers vs What You Can Add

Under the fixed-rate method, the 67 cents per hour covers electricity and gas for heating, cooling, and lighting your workspace, phone and internet expenses, stationery, and computer consumables such as printer ink and paper. It does not cover the decline in value (depreciation) of office furniture, equipment, or technology. This means that even if you use the fixed-rate method, you can still claim depreciation on your desk, chair, computer, monitor, and other depreciating assets used for work. You can also claim the cost of repairs to work-related equipment. This combination of the fixed rate plus equipment depreciation is often the most practical approach for workers who have invested in their home office setup but do not want to track every utility bill.

When to Choose Actual Cost Over Fixed Rate

The actual-cost method tends to be more beneficial when your total running expenses are high relative to your hours. This is common in states with high electricity prices, for workers with expensive internet plans that are predominantly used for work, and for those who have a dedicated room used exclusively as a home office. If your internet plan costs $120 per month and you use it 60% for work, that alone contributes $864 per year to your actual-cost deduction. Add in electricity, phone, depreciation, and stationery, and the total can easily exceed what the fixed-rate method would provide. The break-even point varies, but as a general guide, if your total actual expenses exceed $0.67 times your total WFH hours, the actual-cost method is the better choice.

Example Calculation