Taxpayers must satisfy three conditions to be eligible to use the fixed rate method:

1. The work must involve carrying on substantive employment duties or in carrying on business. Occasionally checking emails is not sufficient to meet this condition.
2. the taxpayer must have incurred deductible additional running expenses of a kind outlined below.
3. the taxpayer must meet the STRICT RECORD KEEPING requirement. The importance of actual records will be crucial – taxpayers cannot rely on estimations.
   

Method 1: Fixed Rate Method

The ATO accepts the claim amount being 70 cents per hour working from home (you should have a diary showing working hours). The fixed rate method covers all utilities, phone, internet, stationery, and computer consumables.

Method 2: Actual Cost Method:

If you have an “exclusive area for your work”, you may use the exact expense ratios to claim percentages of the running costs such as home office equipment, computers, printers and telephones, heating, cooling and lighting; the costs of repairs to your home office furniture and fittings and portion of cleaning expenses. Employees cannot claim rent or mortgage repayments.

Energy (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables. You cannot claim these items separately.

Depreciable Items

You can claim decline in value of depreciating assets (e.g., laptops, monitors, office furniture, within a reasonable amount) and repairs to those assets. You need to have receipts for all the items and report the purchase date, prices paid and work-related percentage.

Record keeping

A full-year record of actual hours worked (e.g., timesheets, rosters, or a diary).

At least one bill or receipt for each of the expenses covered by the rate (e.g., one electricity bill, one internet bill) to prove you incurred them. [1]