Most tradies don't think of themselves as having a home office. But if you're doing quotes, handling invoices, processing BAS lodgements, scheduling jobs, or running any administrative side of your business from home — you probably have one. And that means you're entitled to claim home office expenses as a tax deduction.

The ATO updated its approach to home office claims in 2023, replacing the old "80 cents per hour" method with a revised fixed-rate method. Understanding how it works — and how it specifically applies to trade businesses — can put hundreds of dollars back in your pocket each year.

Do Tradies Really Have a Home Office?

The simple answer is yes — if you do any of the following from home, you have a work-related home office:

  • Writing quotes or estimates
  • Responding to customer emails or messages
  • Processing invoices and chasing payments
  • Lodging BAS or managing accounts
  • Job scheduling and diary management
  • Researching materials, suppliers, or technical specifications
  • Completing compliance paperwork (licences, safety documentation)

You don't need a dedicated room. You don't need a separate phone line. You don't need expensive equipment. If you use a laptop, tablet, or even your phone at home to run any part of your business, that qualifies.

You cannot claim: time spent scrolling social media, personal phone calls, watching television while thinking about work, or any activity that isn't genuinely business-related.

The Two ATO-Approved Methods

The ATO allows two methods for calculating your home office deduction:

Method 1: The Revised Fixed Rate Method (67 Cents Per Hour)

From 1 July 2022 onwards, the fixed rate is 67 cents per hour of genuine work-from-home time. This single rate covers:

  • Energy costs (electricity, gas)
  • Internet costs (the home internet component)
  • Mobile and home phone use (the work portion)
  • Stationery and computer consumables (printer ink, paper)

What's not included in the 67-cent rate:

  • Depreciation on equipment (your laptop, printer, desk — claimed separately)
  • Decline in value of furniture used in the home office
  • Occupancy costs (rent, mortgage interest, rates) — only available via the actual cost method

How to use this method:

  1. Record every hour you work from home. The ATO requires you to keep a diary or similar contemporaneous record (a running log in a notes app works). Unlike under the old COVID-era method, you can't estimate hours — they must be tracked.

  2. At year end, multiply total hours by $0.67.

  3. You can also claim additional deductions on top of the 67 cents: the work-related portion of any equipment you use (laptop, printer, monitor), minus the depreciation rate.

Example:

  • You work 4 hours per week from home doing admin (52 weeks = 208 hours, less 4 weeks leave = 192 hours)
  • Fixed-rate deduction: 192 × $0.67 = $128.64
  • Plus: 60% of laptop depreciation ($1,500 laptop over 2 years = $750/yr, 60% work use = $450)
  • Total home office deduction: ~$578

Not massive, but worth claiming.

Method 2: The Actual Cost Method

This method claims actual home running costs based on the floor space percentage of your dedicated work area.

Formula: (Office floor area ÷ Total home floor area) × Annual running costs = Deduction

Running costs that can be claimed:

  • Electricity and gas
  • Internet (the home use component minus personal use)
  • Cleaning of the work area
  • Repairs and maintenance of the work area
  • Home phone
  • Depreciation of furniture and equipment

What's NOT included for most tradies:

  • Occupancy expenses (rent, mortgage interest, council rates, home insurance) — only claimable if no other use exists for the area AND you have a dedicated, separate space
  • Note: Claiming occupancy expenses can trigger CGT implications when you sell your home, because a portion becomes assessable as a business asset. Most tradies should NOT claim occupancy costs unless advised by an accountant.

Example:

  • Dedicated office area: 12 sqm
  • Total home size: 180 sqm
  • Floor area percentage: 6.67%
  • Annual electricity/gas/internet: $4,500
  • Deduction: 6.67% × $4,500 = $300 (plus equipment depreciation)

For most tradies, the actual cost method yields a similar result to the fixed-rate method unless they have a large, clearly dedicated office space.

Which Method is Better for Tradies?

For most sole trader tradies doing part-time home admin, the fixed-rate method (67 cents/hour) is simpler and often comparable in value. It requires tracking hours but doesn't require working out floor area percentages or splitting utility bills.

Use the actual cost method if:

  • You have a genuinely large, dedicated workspace at home
  • Your home running costs are high
  • You want to claim depreciation on significant furniture and equipment
  • Your accountant recommends it based on your specific numbers

The ATO allows you to choose the most advantageous method each year, as long as you have the records to support it. You don't need to use the same method year after year.

Equipment Depreciation — Claiming Your Laptop, Printer and Phone

Regardless of which home office method you use, you can claim the work-related portion of equipment as a separate deduction:

Laptop or Computer

If you use your laptop for both work and personal purposes, you claim the work-related percentage. A tradie who uses a laptop 60% for work claims 60% of the annual depreciation.

Depreciation is calculated over the effective life of the equipment:

  • Laptop: ATO effective life is typically 2–3 years
  • Printer: typically 3 years
  • External monitor: typically 5 years
  • Desk: typically 10 years

For equipment costing $300 or less that's predominantly for work use, you can claim the full cost immediately.

Example:

  • $1,200 laptop, 60% work use, 2-year effective life
  • Depreciation rate: 50% per year (diminishing value method)
  • Year 1 deduction: $1,200 × 50% × 60% = $360

Alternatively, under the instant asset write-off (currently available until 30 June 2026 for assets under $20,000), sole trader tradies may be able to write off the full work-related cost in year one. Talk to your accountant.

Phone

Your phone is likely used for both work and personal purposes. To claim the work portion, you need a representative 4-week log of your total calls and data usage vs work-related usage.

  • Phone bill: $80/month ($960/year)
  • Work use after 4-week diary: 40%
  • Annual deduction: $384

Home Internet — How to Split the Cost

Your home internet bill is partially deductible for the portion used for work. The ATO accepts reasonable apportionment methods, including:

  • Hours of work internet use vs total household use
  • Number of users in the household and estimated work use split

Example:

  • Annual internet bill: $1,200
  • Household of 4, you estimate 15% of total data is work-related
  • Deduction: $180

If you use the fixed-rate method, internet is included in the 67 cents/hour calculation. You can't claim it separately as well.

Stationery, Paper, and Consumables

Printer ink, paper, pens, envelopes, stamps, folders — any stationery used for work purposes is deductible. Keep receipts. These are straightforward claims and low-risk with the ATO.

If you use the fixed-rate method, stationery is included in the 67 cents/hour rate. If using actual cost method, you claim it separately at the actual cost.

What Records You Need

The ATO now requires contemporaneous records for home office claims — you can't just estimate at tax time.

Fixed-rate method:

  • A diary, spreadsheet, or log app recording hours worked from home each day
  • Kept for the full year (or a representative 4-week period if your hours are consistent)
  • Receipts for any equipment purchased separately

Actual cost method:

  • Evidence of all home running costs (electricity bills, internet bills)
  • Calculation showing the floor area percentage
  • Receipts for equipment and furniture
  • Evidence of work use percentage for shared items

The ATO has been scrutinising home office claims more carefully since 2022. Keeping proper records isn't optional — it's the difference between a clean return and an audit adjustment.

Home Office Claim vs Occupancy Costs — The CGT Warning

Some accountants suggest claiming occupancy expenses (mortgage interest or rent) against your home office. While technically available under the actual cost method for a dedicated space, this comes with a significant trap: it can trigger Capital Gains Tax when you sell your home.

If you claim occupancy expenses, part of your principal place of residence loses its CGT main residence exemption. When you sell, the ATO calculates the portion of the gain attributable to the "business" part of your home and taxes it as a capital gain.

For most tradies who own their home and plan to sell eventually, the CGT cost often exceeds the annual tax saving from claiming occupancy expenses. Do not claim occupancy expenses without specific advice from your accountant — this is one situation where a DIY approach can cost you significantly more in the long run.

Comparison: Home Office Methods at a Glance

  • What's included — Energy, internet, phone, stationery — Everything at actual cost
  • Equipment depreciation — Claimed separately — Claimed separately
  • Occupancy costs — Not available — Available (with CGT risk)
  • Record-keeping — Hourly diary — Bills + floor area + diary
  • Complexity — Low — Medium-High
  • Best for — Tradies with low admin hours — Large home office, high running costs
  • Occupancy CGT risk — No — Yes (if claimed)

Claiming Your Home Office on Your Tax Return

Whether you're a sole trader or employ yourself through a company, home office expenses are claimed differently:

Sole trader: Home office expenses go in the "Other work-related expenses" section of your individual tax return. Use the ATO's Home Office Expenses Calculator at ato.gov.au to calculate your claim before lodging.

Company director: The company can pay a home office allowance to you as director, or you claim expenses personally through your tax return as an employee of your own company.

Accountant's advice: If your home office situation is complex — multiple family members working from home, significant equipment, dedicated space — an accountant will ensure you're claiming correctly and avoiding the CGT pitfalls.

Frequently Asked Questions

Q: I don't have a separate office — I work at the kitchen table. Can I still claim?
Yes, but you can only use the fixed-rate method or claim running costs for the hours the kitchen table is used for work. You cannot claim floor area percentages for a shared space.

Q: I just bought a new laptop for quotes — can I claim the full cost?
If the laptop costs $300 or less and is predominantly for work, yes — full immediate deduction. If it's over $300, you depreciate it over its effective life (typically 2–3 years) at the work-use percentage.

Q: Can my spouse also claim home office expenses for the same home?
Yes, each person working from home can claim their own home office expenses independently. If you're both self-employed and both working from the same space, you each need a diary and calculation, but both can claim.

Q: How do I track hours for the diary requirement?
An app like Toggl, a spreadsheet, a note in your calendar, or even a handwritten log works. The key is that it's recorded at the time — not reconstructed from memory later. Even a simple WhatsApp note to yourself works.