Working from home gets sold as the cost-free option compared to commuting or coworking. It is not actually free. The costs just move from being visible (transport fares, coffee runs) to being baked into bills you were paying anyway, which makes them easy to overlook.
What it actually costs
Australia has higher monthly internet costs than much of Europe, at an average of around $80.57 a month, even as speeds continue to improve [Compare the Market, comparethemarket.com.au].
On electricity specifically, working from home has been estimated to increase household electricity costs by 10 to 30%, translating to an additional $150 to $300 a year per remote worker, largely driven by heating, cooling, and running multiple devices through the working day [EU Solar, eurosolar.com.au].
None of this shows up as a single line item. It blends into your existing power and internet bills, which is exactly why most people underestimate it.
What you can claim back
The ATO offers two methods to claim working from home deductions for the 2025-26 income year.
The fixed rate method
The fixed rate method is 70 cents per hour worked from home, covering electricity, gas, internet, phone, and stationery in a single rate [H&R Block, hrblock.com.au].
You need a continuous record of hours worked from home across the full year to use it.
The actual cost method
The actual cost method lets you claim the real work-related portion of each expense, including electricity, gas, internet, phone, and depreciation on equipment, but requires more detailed record-keeping and a dedicated workspace [Tax Serve, taxserve.com.au].
You can calculate your deduction under both methods and use whichever produces the better result, provided you have the records to support it.
The mistake that costs people the most
Claiming the 70 cent fixed rate and then separately claiming internet or electricity on top of it. The ATO calls this double-dipping, and it is a well-known audit trigger [Tax Serve, taxserve.com.au].
If you use the fixed rate, those specific running costs are already included and cannot be claimed again.
What's changing from 1 July 2026
A proposed $1,000 instant work deduction has been floated as part of recent federal budget discussions, intended to let workers with under $1,000 in total work-related expenses claim that amount without itemising [FairWork Mate, fairworkmate.com.au].
As of June 2026, confirm the current status of this measure before relying on it, since reporting on its exact legislative status has varied.
If working from home is not actually working for you
For some people, once you add up the real electricity and internet cost, plus the isolation that often comes with working alone every day, a coworking membership ends up being a comparable or better value option, with the added benefit of a dedicated, distraction-free space.
If you want to compare what coworking actually costs against your current home office setup, Space Penguin's concierge service can help you find a space that fits your budget. Visit spacepenguin.io/space-concierge to get started.