✅ Updated for 2025–26 — revised ATO rates

Short answer: yes, tradies can claim home office expenses — but only for the portion of time you actually work from home on business tasks. Here's what qualifies, which method to use, and how to calculate your claim correctly.

📋 In This Article

  1. →What qualifies as home office work?
  2. →The two ATO methods
  3. →Fixed rate method (67c/hr)
  4. →Actual cost method
  5. →Record keeping required
  6. →FAQs

What Qualifies as Home Office Work for Tradies?

The ATO allows home office deductions for work you do from home as part of running your business. For self-employed tradies, this typically includes:

  • Writing and sending quotes and invoices
  • Responding to client calls and emails
  • Ordering materials and supplies online
  • Bookkeeping and reconciling accounts
  • Preparing your BAS
  • Researching products, suppliers or codes
  • Any other administrative work done at home for your business

You do not need a dedicated home office to claim. Working from the kitchen table counts. You do need to actually do the work — you can't claim for time you're not working.

The Two ATO Methods

The ATO provides two methods for calculating home office expenses. You can choose whichever gives you the better deduction — but you must apply one method consistently for the whole year.

Method 1: Fixed Rate Method (67 cents per hour)

The simplest method. For every hour you work from home on business activities, you can claim 67 cents. This covers electricity, gas, internet and phone costs — but not depreciation of home office equipment (that's claimed separately).

How to calculate: Keep a log of hours worked from home. Multiply by 67 cents.

Example: If you spend 10 hours per week at home on quotes, invoicing and admin × 46 working weeks = 460 hours × $0.67 = $308.20 deduction for the year.

For many tradies who do a moderate amount of home admin, this adds up to $200–$500/year with minimal record-keeping effort.

Method 2: Actual Cost Method

More complex but potentially higher deduction. You calculate the actual work-related percentage of each home running cost — electricity, gas, internet, cleaning, decline in value of furniture.

You need to establish the work area as a percentage of your total home floor area, and apply that to eligible expenses. This method requires more detailed records and is generally only worth it if you have a dedicated home office and significant home running costs.

Most tradies are better off with the fixed rate method — it's simpler and the deduction is reasonable for the admin time most tradies actually spend at home.

Record Keeping

Fixed rate method: Keep a diary or log of hours worked from home. The ATO requires this — you can't just estimate. A phone notes app, Google Calendar entries or a simple spreadsheet all work. You must keep this for the full year, not just a sample period.

Actual cost method: Keep utility bills, receipts for home office equipment, a floor plan or measurements to establish work area percentage, and records of all home running costs claimed.

💡 Quick tip:

Use a simple phone habit: at the start of every home admin session, start a timer. Log the hours weekly. Takes 30 seconds and gives you an auditable record the ATO would accept.

Can I claim home office AND the 67c/km vehicle deduction?

Yes — these are separate deductions. The home office claim covers working from home. The vehicle deduction covers driving between job sites. They don't overlap.

Can I claim my home office if I rent?

Yes — renters can claim home office expenses using either method. Note that unlike homeowners, claiming a dedicated home office area doesn't create a capital gains tax issue at sale for renters.

What about internet and phone — aren't those covered separately?

Under the fixed rate method (67c/hr), your internet is covered in the rate — you can't also claim your internet plan separately. Under the actual cost method, you calculate internet separately. For your mobile phone, the work-use percentage is always claimed separately regardless of which home office method you use.

What if my partner also works from home?

Each person can only claim for the hours they personally work from home. If you both use the same space, you can each claim for your own hours — you don't split a single deduction between you.

## Common Home Office Deduction Mistakes Tradies Make (And How to Avoid Them) The ATO cracks down hard on home office claims that don't stack up. As a tradie, your claim needs to be defensible — and most mistakes come from claiming too much, too broadly, or for work that doesn't actually happen at home. **The biggest mistake: claiming your entire home office as a dedicated workspace.** If you use your kitchen table, spare room, or garage to do quotes, invoicing, and admin work — but you also use that space for personal reasons — you can't claim the whole room. You're only entitled to claim the *proportion* of that space used exclusively for business. This is where the fixed-rate method (per hour) often works better for tradies than calculating square footage. **Second mistake: not keeping records of *when* you worked from home.** The ATO wants evidence. A diary entry, time-tracking app, or even a simple spreadsheet showing dates and hours you spent on business admin is essential. If you claim 10 hours per week but can't prove you actually worked those hours, your entire claim becomes questionable. Tools like Tradify or Xero automatically log time spent on quoting, invoicing, and scheduling — which gives you hard evidence. **Third mistake: claiming phone and internet at 100%.** Your home phone and internet aren't entirely business expenses, even if you use them for work. The ATO expects you to claim only the work-related portion. Most tradies claim 20–40% depending on how much personal use happens. Write down your reasoning and keep it consistent year to year. **Fourth mistake: claiming expenses that don't relate to your home office.** Your accountant software, industry subscriptions, and vehicle expenses aren't home office deductions — they're separate business deductions. Home office claims are strictly about the space itself: rent (if renting), council rates, property taxes, utilities, cleaning supplies, office furniture, and depreciation. Don't double-dip by claiming the same expense under two categories. **How to avoid these mistakes:** - Use the **fixed-rate method** (currently 67 cents per hour, 2025–26) unless you have a genuinely dedicated home office room - Keep a **simple diary** of work-from-home hours (many accountants provide templates) - Work with your accountant before June 30 to confirm what you've claimed - Keep receipts for anything over $300 - Be conservative — a $200 claim that survives an audit beats a $2,000 claim that gets knocked back --- ## Equipment, Furniture, and Capital Works: What You Can Claim Tradies often get confused about what counts as a deductible expense versus a capital asset that must be depreciated. **Items you can claim in full (under $300 per item):** - Office chairs, desk lamps, shelving units - Small tools used only for admin (hole punch, stapler, filing cabinet) - Stationery and office supplies - Printer ink and paper - Cleaning supplies for your office area - Small rugs or mats **Items over $300 — depreciation applies:** Anything over $300 is a capital asset and gets depreciated over its effective life. This includes: - Desks and large furniture ($300+) - Computers and monitors - Printers (over $300) - Air conditioning units or heating systems for your office - Built-in shelving or storage The ATO allows depreciation over typical asset lives. A computer depreciates over 4 years, office furniture over 10 years. Your accountant can calculate this automatically using accounting software. **Capital works (building improvements):** If you renovate your home office — painting, new flooring, installing shelves — you can't claim this as a deduction. However, if your home is an investment property, some capital works deductions may apply. If it's your primary residence, capital improvements don't attract a deduction. **The smarter approach for tradies:** Keep total annual office furniture and equipment purchases under $300 per item where practical. A $280 office chair is fully deductible this year. A $320 monitor must be depreciated over 4 years, which is slower. Plan your purchases strategically. --- ## Home Office Deductions: Fixed-Rate vs. Actual Expenses | Factor | Fixed-Rate Method (67¢/hour) | Actual Expenses Method | |--------|------|---------| | **Best for** | Part-time office work, variable hours, simplicity | Dedicated home office, high utility costs, records available | | **2025–26 rate** | 67 cents per hour | Not applicable | | **Calculation** | Hours worked × 67¢ | Actual costs ÷ business % use | | **Record-keeping** | Diary/time log only | Receipts + diary + utility bills | | **Audit risk** | Very low if hours logged | Higher if costs seem inflated | | **Example claim** | 15 hrs/week × 52 weeks × $0.67 = $521 | $4,800 annual utilities × 10% office use = $480 | | **Best practice** | Compare both methods, claim the higher amount | Use if home office is 100% dedicated room | **For most tradies:** The fixed-rate method works best because your work-from-home time is usually admin-only (quotes, invoicing, scheduling). You're not running a full office operation — you're using a corner of your home for paperwork. Stick with the fixed rate, log your hours honestly, and avoid complications. ---

💡 TIP: If you run your tradie business through a company structure, check whether you're entitled to claim a director's home office at all. Some structures treat this differently from sole traders. Always confirm with your accountant before lodging — and consider using accounting software like Xero to separate personal and business expenses automatically.

--- ## Frequently Asked Questions

Can I claim my internet bill as a home office expense?

Yes, but only the work-related portion. Most tradies claim 20–40% of their monthly internet bill, depending on personal use. You need a reasonable basis for this percentage — don't just guess. If you have a separate business internet connection, that's 100% deductible. When you claim using the fixed-rate method (67¢/hour), internet isn't claimed separately; it's already factored into the hourly rate. Only use the actual expenses method if you want to claim internet separately.

What if I work from a ute or van most days, but do admin at home 2 hours per week?

You can still claim those 2 hours per week using the fixed-rate method. At 67¢/hour, that's roughly $70 per year — modest but valid if you're logging the time. The ATO expects tradies to claim honestly for the actual work done. If you barely work from home, your claim will be small, and that's fine. Don't inflate hours to justify a larger claim; audits catch this quickly. Make sure your business insurance (check BizCover for tradie-specific policies) covers home-based admin work anyway.

My wife uses our spare room as a home office for her job — can we both claim it?

No — only one person can claim a dedicated workspace. If you both use the same room, you'd both need to use the fixed-rate method and log separate hours. You can't claim the same physical space twice. If you each have a separate area within the room, you could potentially divide the space and claim your portion, but this gets complicated and auditors scrutinise it heavily. Best practice: clarify with your accountant and keep separate time logs if you're sharing a workspace.