Working from home means you may be incurring additional expenses that you wouldn’t normally have if you worked at your employer’s premises. These additional expenses can include increased electricity and heating costs, internet usage, phone calls, and the wear and tear on office equipment like computers and desks. Understanding exactly which of these expenses qualify as work-from-home tax deductions is crucial to ensure you claim correctly and maximise your refund without risking an audit.
The ATO recognises two primary methods for calculating your work-from-home deductions: the fixed-rate method and the actual-cost method. Each has its advantages and requirements for record keeping, so it’s important to choose the method that best fits your working situation and expense tracking capabilities.
Moreover, it’s essential to distinguish between running expenses and occupancy expenses. Running expenses refer to the additional costs incurred by working from home, such as electricity, internet, and office supplies. Occupancy expenses, on the other hand, relate to the costs of owning or renting your home, including mortgage interest, rent, land taxes, and house insurance premiums. Typically, employees cannot claim occupancy expenses unless their home is their principal place of business or they run a home-based business.
Additionally, if you operate a home-based business, you may be able to claim a wider range of expenses, including a portion of your rent or mortgage interest, council rates, and home insurance. However, claiming these occupancy expenses can have capital gains tax (CGT) implications when you sell your home. It’s important to keep detailed records and seek professional advice to understand the full impact.
Finally, maintaining accurate and detailed records is critical. The ATO requires evidence such as invoices, receipts, diaries, or timesheets that document your actual hours worked from home and the expenses incurred. Estimates or guesswork are no longer acceptable. Keeping these records for at least five years will ensure you can substantiate your claims if audited.
By understanding these key points and following the ATO’s guidelines, you can confidently claim your work-from-home tax deductions and reduce your taxable income legitimately and effectively.
You may be eligible to claim work-from-home deductions if:
It’s important to note that simply choosing to work from home occasionally does not automatically entitle you to large deductions. Claims must be reasonable, documented, and directly related to income-producing activities.
To successfully claim these deductions, you need to demonstrate that the expenses you are claiming are specifically incurred because of your work-from-home arrangements and are not part of your usual household costs. For example, if your electricity bill has increased due to the additional hours you spend working at home, you can claim the work-related portion of this increase. Similarly, if you purchase office supplies or equipment solely for work purposes, these costs may also be deductible.
Additionally, your eligibility to claim work-from-home deductions depends on the nature of your employment and the level of control your employer has over your work environment. Employees who are required to work from home as part of their job duties are more likely to qualify for these deductions than those who work from home occasionally or by choice.
It's also essential to understand that the Australian Taxation Office (ATO) requires that you keep accurate records to substantiate your claims. This includes maintaining receipts, invoices, and detailed logs of your work hours and expenses. Without proper documentation, your claim may be denied or reduced during a tax audit.
Remember that some expenses, such as mortgage interest or rent, are generally not claimable unless you operate a home-based business and have a dedicated work area that qualifies as a place of business. In contrast, running expenses like electricity, internet, phone usage, and office supplies are typically claimable when they relate directly to your work activities.
By ensuring your claims meet these criteria and are supported by evidence, you can confidently claim work-from-home tax deductions and reduce your taxable income appropriately.
The ATO currently allows two main approaches:
Under the revised fixed rate method (currently 67 cents per hour at the time of writing — always confirm with your tax advisor), you can claim a set rate for each hour worked from home.
This rate covers:
However, you must:
Importantly, you cannot separately claim expenses already included in the fixed rate.
This method allows you to claim the actual work-related portion of your expenses, including:
This approach requires detailed calculations and records, including:
While potentially more beneficial in some circumstances, it requires significantly more documentation.
Here are common work-from-home deductions:
Items under $300 may generally be claimed outright (subject to ATO rules). Items over $300 are usually depreciated over time.
Common mistakes include attempting to claim:
Employees typically cannot claim occupancy costs unless their home is genuinely their principal place of business.
This is an area where many taxpayers overclaim — and where ATO audits frequently focus.
It is important to understand why these claims are often disallowed. Mortgage repayments and rent are considered occupancy expenses, which relate to the cost of owning or renting your home. For most employees working from home, their home is not their principal place of business, so these expenses are not deductible. Only those running a home-based business with a dedicated work area that qualifies as a place of business can claim these costs.
Similarly, everyday household items such as coffee, snacks, or groceries are personal expenses and not related to work activities. Attempting to claim these as work-related expenses can raise red flags during an audit.
Other common errors include claiming 100% of internet or phone bills without properly apportioning the work-related portion, or failing to keep adequate records to substantiate claims. The ATO requires clear evidence of the work-related use percentage for shared services.
To avoid these pitfalls, ensure you only claim expenses that meet the ATO's following criteria: they must be directly related to earning your income, incurred as a result of working from home, and properly substantiated with records.
Understanding these limitations and maintaining accurate documentation will help you confidently claim legitimate work-from-home tax deductions while minimising the risk of audit adjustments or penalties.
The ATO now requires:
Estimates without evidence are no longer sufficient.
At Wotton & Co, we often see taxpayers relying on guesswork. This increases audit risk and can lead to penalties or amended assessments.
To comply with these requirements, it is essential to maintain detailed and accurate records throughout the income year. This includes keeping a log of the hours you work from home, which can be tracked using digital timesheets or a handwritten diary. Such records should clearly indicate the days and times you performed work-related activities at home.
For expenses like electricity, internet, and phone bills, you must retain all relevant invoices and receipts. When expenses are shared between work and private use, you need to calculate the proportion attributable to work. This apportionment should be reasonable and based on actual usage patterns, supported by evidence such as diary entries or usage reports.
The ATO does not accept vague estimates or assumptions; therefore, substantiating your claims with concrete documentation is critical. Failure to do so may result in your deductions being disallowed, additional tax assessments, or penalties.
Using tools such as the ATO's myDeductions app can simplify record keeping by allowing you to capture expenses and work hours in real time. Additionally, consulting with a tax professional can help ensure your records meet ATO standards and that you maximise your eligible deductions while minimising audit risk.
If you operate a business from home (rather than being an employee), additional deductions may apply, including:
However, claiming occupancy expenses can have capital gains tax (CGT) implications when you sell your home. Professional advice is essential before proceeding.
Work from home deductions are legitimate — but they must be substantiated and reasonable. This means you need to keep accurate records and only claim expenses that directly relate to your work activities conducted at home. The Australian Taxation Office (ATO) expects taxpayers to provide evidence such as receipts, invoices, and detailed logs of hours worked from home to support their claims. Without proper documentation, claims can be denied or adjusted during an audit, which may lead to additional tax liabilities or penalties.
It is also important to ensure that the amounts claimed are reasonable and reflect the actual work-related portion of the expenses. For example, if you use your home internet for both personal and work purposes, you should only claim the percentage that corresponds to your work-related use. Similarly, expenses like electricity or heating should be apportioned based on the time and space used for work activities.
Additionally, understanding the difference between running expenses and occupancy expenses is crucial. Running expenses, such as electricity, internet, and office supplies, are generally claimable when working from home, whereas occupancy expenses like rent or mortgage interest are typically only claimable if your home is your principal place of business or you run a home-based business with a dedicated work area.
By following these guidelines and maintaining thorough records, you can confidently claim your work-from-home tax deductions while complying with ATO requirements and minimising the risk of audit issues.
Tax law changes frequently, and ATO data-matching capabilities are increasingly sophisticated. Ensuring your claims are accurate and compliant reduces stress and protects you from future audits.
At Wotton & Co Tax & Business Advisory, we help individuals and business owners maximise legitimate deductions while staying fully compliant with ATO regulations.
We don’t just lodge returns — we provide strategic advice to ensure you claim what you’re entitled to, without unnecessary risk.
If you’re unsure which method to use, what you can claim, or how to keep compliant records, speak with the experienced team at Wotton & Co.
We provide tailored tax advice to individuals, employees, and business owners across Australia.
Running a small business involves juggling many responsibilities, and tax time can feel especially overwhelming. At Wotton & Co, we help small business owners across Australia not just stay compliant, but also take advantage of all small business tax deductions they’re entitled to. Many businesses miss out on thousands of dollars in potential tax savings each year simply because they don’t know what they can claim.
Here are some of the most commonly overlooked tax deductions for small businesses:
If you run your business from home, you may be able to claim a portion of your rent or mortgage interest, electricity, internet, and even cleaning costs. The ATO provides different methods for calculating your home office expenses, and choosing the right one can make a big difference to your deduction.
Do you use your personal vehicle for business purposes? You may be eligible to claim fuel, maintenance, insurance, registration, and even depreciation. Be sure to keep a logbook or use a mileage tracking app – the ATO requires records to support your claims.
Fees paid to your accountant, lawyer, business coach or other professional advisers are tax-deductible if they directly relate to the operation of your business. This includes one-off consultations and ongoing retainer services.
From Facebook ads to printed flyers, website hosting to photography – all marketing and advertising costs used to promote your business are deductible. This includes the cost of engaging marketing consultants or web designers.
If you’re investing in yourself or your staff with training programs, short courses, or professional development that relates to your current business operations, it’s usually deductible. This is a great way to level up your business and get some money back at tax time.
Smaller tools and equipment can usually be written off immediately under the instant asset write-off scheme (if eligible), while larger items can be depreciated over time. Computers, printers, and even work phones can fall into this category.
If you've made all reasonable attempts to recover a debt and have written it off in your books, you may be able to claim it as a tax deduction. This is especially relevant for service-based businesses.
Business insurance premiums – including public liability, professional indemnity, and income protection (if included in assessable income) – are typically deductible.
Any interest charged on loans used for business purposes, or bank fees related to your business account, can be deducted. Make sure these expenses are separate from your personal banking to avoid confusion.
Every business is different, and the best way to maximise your deductions is to work with a professional who understands your industry and your goals.
At Wotton & Co, we specialise in working with small and family-run businesses. We take the time to understand your operations and tailor strategies to ensure you’re not missing out on valuable deductions or tax planning opportunities.
Need help at tax time or with setting up your accounts correctly from the start?
Let’s talk. Contact Wotton & Co today for friendly, expert accounting and business advice.
Donating your time and professional expertise can be incredibly rewarding, especially when it benefits a cause you're passionate about. But when it comes to tax time, many Australians are left wondering: can you claim a tax deduction for donating services?
At Wotton & Co, we work with individuals, sole traders, and small businesses across Adelaide and South Australia to ensure they fully understand their tax obligations and opportunities, including when it comes to charitable giving. Below, we break down the rules surrounding donated services, how they differ from financial donations, and what you can do to maximise your impact (and tax efficiency).
In short: no, donating your time or professional services, such as legal advice, building work, design services, accounting, or consulting, is not tax deductible under Australian tax law.
Even if your services have a clear commercial value, and even if they are provided to a registered charity or Deductible Gift Recipient (DGR), the Australian Taxation Office (ATO) does not recognise donated services as tax-deductible gifts.
That’s because tax-deductible gifts must involve the transfer of money or property. A service, unlike a physical item or monetary contribution, does not constitute “property” under tax law, and therefore doesn’t meet the criteria.
The ATO defines a gift as a voluntary transfer of money or property where the donor receives no material benefit in return. While donated goods, like office furniture, vehicles, or equipment, are considered “property” and potentially deductible (subject to certain conditions), services do not leave behind a transferable asset that can be valued and claimed.
That means a graphic designer who donates 10 hours to create branding for a charity, or a builder who volunteers their skills to renovate a local shelter, cannot claim that time as a deduction—no matter the commercial value of their contribution.
While services themselves aren't deductible, there are still ways to make a meaningful contribution and receive tax benefits. Here are a few options:
1. Out-of-pocket Expenses
If you're volunteering your time and incur personal costs in the process—such as travel, uniforms, materials, or parking—you may be able to claim these as a tax deduction, but only if:
- You are not reimbursed by the charity or organisation.
- The charity is a registered Deductible Gift Recipient (DGR).
- The expenses are directly related to the voluntary work.
Keep detailed records and receipts of these expenses, and speak with your accountant to confirm eligibility.
Gifting tangible items such as second-hand goods, new products, or other property can be tax deductible if:
- The donation is made to a registered DGR.
- The value of the donation can be substantiated (e.g., market value or purchase receipt).
- The item is considered valuable enough to meet thresholds set by the ATO (generally over $2).
Gifts of property acquired less than 12 months before the donation may be deductible at the lower of the market value or the cost of acquisition.
This is the most straightforward form of deductible giving. Cash donations of $2 or more to DGRs are tax deductible. You’ll need to keep a receipt, and the deduction must be claimed in the income year the donation was made.
You can also set up regular payroll donations through your employer if they offer a workplace giving program—this streamlines the process and can result in immediate tax savings.
In South Australia, we’re fortunate to have a strong network of not-for-profits, grassroots organisations, and community groups. While the national tax laws apply uniformly, local initiatives often present opportunities for volunteering and contributing in ways that align with your values.
If you're a business owner, particularly in fields like trades, legal services, or consulting, it's worth having a discussion about how your business can support local causes in a strategically beneficial way. For example:
- Sponsorships (which may be deductible depending on the arrangement)
- Donating business stock or assets
- Partnering with charities for fundraising or awareness campaigns
These types of contributions might also boost your visibility and community presence while delivering genuine value to the organisations you support.
At Wotton & Co, we support South Australians who give back to their community, whether it’s through time, money, or expertise. While donating services may not directly reduce your tax bill, there are still many smart ways to contribute and claim deductions where legally possible.
If you’re unsure whether your charitable contributions or business-related giving qualifies for a deduction, or you want to structure your giving more tax-effectively, we’re here to help.
Need Help With Tax and Donations?
Whether you're a business owner, freelancer, or generous individual, Wotton & Co can help you navigate the complexities of tax deductions and charitable giving. Book a consultation today to make sure your giving is aligned with ATO rules—and your values.
Proudly based in Glenelg and serving clients across South Australia.
Contact us now to speak with a friendly tax advisor.
