If you’ve been claiming working-from-home (WFH) expenses over the past few years, this is worth a quick read — because the rules might not be as relaxed as you think.
The ATO has recently come out on top in a court case involving WFH deductions, reinforcing just how important proper record-keeping and genuine claims really are.
What happened?
In this case, a taxpayer claimed a range of working-from-home expenses — but the ATO challenged the claim, and ultimately the court sided with the ATO.
Why?
Because the taxpayer couldn’t properly substantiate their deductions.
In plain English:
No evidence = no deduction.
What this means for you
This isn’t about scaring anyone — but it is a gentle reminder that WFH deductions are still being closely monitored.
Here’s what the ATO is clearly saying:
You CAN claim WFH deductions if:
- You genuinely work from home
- You incur additional running costs
- You keep proper records
You CANNOT claim if:
- You’re guessing or estimating without evidence
- You double-dip (e.g. claim both methods incorrectly)
- You lack documentation (diary, bills, logs)
Fixed Rate vs Actual Cost – Don’t Mix Them Up
There are still two main methods available:
Fixed Rate Method
- Simpler to use
- Covers things like electricity, internet, phone
- Requires a record of hours worked from home for the full year
Actual Cost Method
- More detailed (and sometimes higher deduction)
- Requires receipts and calculations for each expense
The key takeaway:
The ATO expects evidence either way — even for the “simpler” option.
Record-Keeping Is EVERYTHING
If this case tells us anything, it’s this:
The ATO isn’t just checking what you claim — they’re checking how you prove it.
Make sure you’re keeping:
- A diary or timesheet of WFH hours
- Copies of bills (internet, electricity, etc.)
- Evidence of work-related usage
Even a basic spreadsheet is better than nothing.
Why this matters more in 2026
WFH claims surged during COVID — and they haven’t dropped off.
That means:
- The ATO has more data than ever
- Compliance activity is increasing
- Audit attention remains high
In short: claims are under the microscope.
Our advice (in plain English)
- Don’t “wing it” with estimates
- Keep simple but consistent records
- Ask us before claiming anything unusual
- If unsure — it’s always safer to check
Final thoughts
Most people claiming WFH deductions are doing the right thing — but this case shows the ATO is very willing to challenge claims that don’t stack up.
If you want peace of mind (and no nasty surprises), a quick check before lodging can go a long way.
Need a hand?
If you’re unsure about your WFH deductions or want us to review your records, just reach out — we’re always happy to help.
