ATO Interest Charges After 1 July 2025: Why GIC and SIC Are No Longer Deductible

For 2025–26, an eligible taxpayer using the fixed-rate method can calculate specified additional running expenses at 70 cents for each hour worked from home. The method is convenient, but it is not an automatic allowance and does not remove the need to prove that the taxpayer worked from home and incurred relevant costs.

The strongest claims are built during the year. A calendar recreated after 30 June from memory is materially weaker than contemporaneous timesheets, rosters, diaries, system logs or employer records.

What the fixed rate covers

The rate covers specified additional running expenses, including energy, internet, phone, stationery and computer consumables. Because those costs are built into the rate, the same component cannot be claimed again.

Decline in value of eligible work equipment, repairs and maintenance of that equipment, and cleaning of a dedicated home office may be separately deductible where the ordinary requirements are met. Occupancy expenses such as rent, mortgage interest and rates are generally not available to an employee merely because work is performed at home.

The evidence standard

The taxpayer needs a record of all hours worked from home for the entire income year. A representative four-week diary is not sufficient for the hours component of the current fixed-rate method.

The taxpayer must also retain at least one record for each type of covered expense incurred. Employer reimbursements must be identified because reimbursed costs are not deductible.

Fixed rate versus actual cost

The actual-cost method may produce a different result but requires a defensible work-related calculation for each expense. That can involve floor area, usage patterns, itemised bills, appliance power consumption, decline in value and private-use apportionment.

The method should be selected after comparing lawful calculations. A higher result is not useful if the evidence cannot support it.

Common risk points

• Claiming full-day hours without allowing for leave, breaks or partial office days.
• Adding phone, internet or electricity costs already included in the fixed rate.
• Claiming equipment at 100% work use where private use also occurs.
• Ignoring reimbursements or employer-provided equipment.
• Using employee rules for a home-based business without considering the business framework.

Practical takeaway

The 70-cent rate simplifies arithmetic, not substantiation. Maintain complete hour records, preserve expense evidence and compare the fixed-rate result with a properly supported actual-cost calculation.

Official sources and further reading

• Australian Taxation Office: Fixed rate method for working from home expenses
• Australian Taxation Office: Records you need to keep

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