The myth: "I work at the kitchen table, so I can't claim anything"
It comes up almost every August. Someone drops off their receipts, we ask about working from home, and the answer is some version of: "I don't have a proper office, I just use the dining table — so I can't claim that, right?"
Wrong. There is no rule in Australian tax law that says you need a dedicated, separate room to claim a home office tax deduction. If you are genuinely carrying out your employment duties from home and you're incurring additional running costs as a result, you can claim — whether that happens in a converted spare bedroom in Hoppers Crossing or on a laptop at the kitchen bench in Altona.
This myth quietly costs people real money. A few hundred dollars of legitimate deductions left unclaimed, every year, adds up.
What the ATO actually requires
To claim working-from-home running expenses, three things need to be true:
- You're actually working from home — carrying out your employment duties or running your business, not just occasionally checking emails after hours or taking a call on the couch.
- You incur additional running costs because of that work — extra electricity, gas for heating and cooling, internet, phone, stationery, and the decline in value of equipment you own.
- You have records to prove it — this is where most claims actually fall over, not on the question of which room you sat in.
Notice what isn't on that list: a door, a desk, or a floor plan. The physical setup is not the test.
Why the myth persists
This one has a kernel of truth buried in it, which is why it's so sticky.
1. It's confused with occupancy expenses
There are two very different categories of home-based work expense:
- Running expenses — electricity, internet, phone, consumables, equipment depreciation. These are available to most people genuinely working from home.
- Occupancy expenses — rent, mortgage interest, council rates, house insurance. These are far more restricted, and this is where the "dedicated space" concept genuinely bites.
For an employee, occupancy expenses are generally not deductible at all — even with a beautifully fitted-out study. Broadly, you'd need to show the area has the character of a place of business, not simply a convenient spot to work. Somewhere along the way, that restriction got mentally applied to everything, and the myth was born.
There's also a good reason to be cautious about claiming occupancy expenses even where you might qualify: it can affect the main residence exemption when you eventually sell your home, potentially exposing part of the capital gain to CGT. Always get advice before going down that road.
2. The old rules had a floor-space method
Historically, the actual cost method involved working out the floor area of your work space as a proportion of the whole home. If you didn't have a distinct area to measure, the calculation felt impossible — so people assumed the deduction was impossible too.
3. COVID-era shortcuts came and went
The temporary 80c shortcut method during the pandemic years, followed by revised fixed-rate rules and tighter record-keeping requirements, left a lot of people unsure what still applies. When people are unsure, they tend to claim nothing — which is the one outcome the ATO will never argue with.
What you can claim without a dedicated room
Two methods are generally available for employees claiming running expenses:
The fixed rate method
A set cents-per-hour rate covering electricity and gas, internet, mobile and home phone, and stationery and computer consumables. It's simple, but it comes with two conditions people frequently miss:
- You need a record of the actual hours worked from home for the whole income year — a timesheet, diary, roster or spreadsheet. Estimates and "four days a week, probably" don't hold up.
- You can't separately claim any expense the rate already covers. Claiming the fixed rate and your full internet bill is a common error and an easy one for the ATO to spot.
You can still separately claim decline in value of your own equipment — laptop, monitor, desk, office chair — plus repairs and maintenance on those items.
The actual cost method
You work out the real work-related portion of each expense. This requires more effort and better records, but often produces a bigger deduction — particularly if you're home most of the week, run power-hungry equipment, or bought significant gear during the year.
And no, you don't need a separate room here either. You need a reasonable, documented basis for apportioning between work and private use.
A practical example
Priya lives in a two-bedroom unit in Werribee. The second bedroom is her kids' room, so she works three days a week at the dining table on a laptop she bought herself, with a monitor and a chair she picked up in January.
Priya has no dedicated office. She still has a legitimate claim:
- Hours worked from home across the full year, logged in a simple spreadsheet, multiplied by the fixed rate — covering her share of electricity, internet and phone;
- Plus decline in value on the laptop, monitor and chair, apportioned for private use.
What she can't claim is a slice of her rent, and she can't claim the trip from home to the office on the days she goes in — travel between home and a regular workplace remains private, regardless of where you did your morning emails.
Where the "dedicated space" question does matter
To be fair to the myth, there are situations where having a distinct work area genuinely changes the answer:
- Sole traders and small business owners running the business from home — where the home is genuinely the base of operations, a claim for occupancy expenses may be available. A dedicated, identifiable area matters here, and so does understanding the CGT consequences.
- Clients visiting your home — a consulting room, treatment room or similar area used to see clients points strongly toward a place of business.
- Apportioning under the actual cost method — a separate space makes it easier to justify how you split heating, cooling and lighting, though it isn't a prerequisite.
What to do before you lodge
It's August, which means plenty of returns are already being lodged and plenty of people are about to leave money on the table. Before you finalise:
- Dig out whatever record you have of your work-from-home hours for the 2024–25 year. Rosters, calendar entries and timesheets all count.
- List any equipment you bought yourself for work during the year, with receipts.
- Check whether your employer reimbursed any of it — reimbursed costs aren't deductible.
- Ask us to run both methods. Which one wins genuinely varies from person to person.
- If your hours record is thin this year, start a proper log now for 2025–26. Ten seconds a day is all it takes.
If you've been skipping your home office tax deduction because you don't have a study, you've likely been short-changing yourself. The team at ProPartners Accountants & Advisers works with clients across Werribee, Hoppers Crossing, Tarneit, Altona, Williamstown, Sunshine and the wider western suburbs — get in touch and we'll work out what you're properly entitled to claim, and make sure it's substantiated if the ATO asks.
This article is general information only and does not take your personal circumstances into account. Rates, thresholds and record-keeping requirements change — please speak with us before acting.