Work from home is the new normal for many in Melbourne, particularly in places such as Dandenong and Pakenham. If you are one of them, knowing how to deduct your work-from-home expenses, or WFH expenses as the cool kids say nowadays, can add up to tax time. When done right, you can receive the highest possible refund and remain on the right side of the ATO.
Whether you’re a full-time remote worker or a part-time freelancer, if you consult experienced tax accountants, it can be a wise move in making sure you get everything right from the get-go. Here is what you need to know for your 2025 tax return.
1. Check if You’re Eligible
You can deduct WFH expenses only if you work from home to perform your job, not just to check emails every now and then.
You’ll also have additional costs, such as electricity or internet usage. And if you’re operating out of Dandenong or working from home in Pakenham, find out if your employer has some kind of written agreement around your WFH arrangement.
ATO will require you to provide evidence, such as time sheets or emails. Tax accountants Dandenong can talk to you about what qualifies.
2. Claiming Your Expenses
There are two options for claiming WFH expenses:
- Fixed-rate approach (67 cents/hour) – includes internet, phone, power and cleaning.
- Actual expense method — allows you to deduct actual costs for bills or rent and furnishings.
The first is easier but the second might give a bigger payback if your expenses are high. Qualified tax accountants can walk you through fixed-rate vs actual cost methods, and help you choose the best one for you.
3. Keep Records That Matter
ATO needs you to keep good records for all claims.
For the fixed-rate approach, maintain a 4-week diary reflecting an average of the hours.
When using true costs, collect receipts for:
- Electricity and gas
- Internet bills
- Home office equipment
Digital aids, like Google Drive or Evernote, make it neat. You are required to keep these for a duration of five years.
4. Measure Your Office Space
If you’re claiming actual costs, measure your space.
You might, for example, be entitled to charge 10% of your bills if your desk occupies 10% of your home.
Mixed-use areas (the dining table) mean time-based calculations (“4 hours of ‘work’ use in a 12-hour day”).
Get this wrong, and overclaiming — and fines — can result.
5. Claim Equipment the Right Way
The full cost of items that cost less than $300 (e.g., a keyboard or webcam) is something you can deduct.
More expensive gear — like that $1,000 ergonomic chair — is said over time via depreciation.
This will require you to provide paperwork and a percentage of work use (i.e., 80% work = $800 deductible).
And these things can save you hundreds on your tax bill.
6. Avoid Applying for Same Thing Twice
You must avoid double dipping.
You can’t take an internet deduction twice — first as a fixed-rate job expense and then as an individual one.
Nor do personal use tools like Netflix or casual phone chats.
Keep it work-related only — and get advice if you’re unsure.
7. Speak to a Tax Pro
ATO rules change often. Dealing with tax accountants in Pakenham can help to make your return process easier and much more accurate.
They can find less well-known deductions — such as for software subscriptions or income protection premiums — and save you time.
And you may also be able to deduct the fees for these services from your taxes.
Conclusion: Start Early, Claim Smart
Strictly speaking, you are entitled to claim these work-from-home expenses and doing so can add $500 to $2,000 to your refund, depending on your setup.
Keep organized, keep track of your hours, your costs, when in doubt, work with professionals.
Whether that means speaking to experienced tax accountants or learning from tax accountants explaining different fixed-rate vs actual cost methods, it’s your best chance at a stress-free tax season in Melbourne.
