The Fine Print Australia · PUBLISHED 24 JUN 2026 · VERIFIED 24 JUN 2026 · AU EDITION

70c/hr Already Covers Your Internet: ATO Home Office Deduction Rules

▶

If you work from home full‑time and use the fixed‑rate method, you can claim 70 cents per hour for your home office including internet and phone – but if you also separately claim your internet bill, the ATO says you’re double‑dipping and your deduction can be knocked back.

The number that matters

70c / hour — fixed rate — ATO 2024–25

For the 2024–25 income year, the ATO’s revised fixed rate method lets individuals and home‑based businesses claim $0.70 per hour worked from home, which already covers electricity, gas, phone and internet running costs, plus stationery and computer consumables.

How it quietly costs you

Mechanism: Fixed rate already includes internet, but people keep claiming it twice.

• The ATO’s revised fixed rate for working from home/home‑based business is 70c per hour from 2024–25 (67c per hour in 2022–23 and 2023–24).
• This fixed rate explicitly includes:
• electricity and gas for heating, cooling and lighting
• home and mobile phone expenses
• home and mobile internet or data expenses
• stationery and computer consumables.

Why double claiming is a problem

• If you use the fixed‑rate method and then also claim a separate deduction for your internet bill, you are claiming the same expense twice, which the ATO treats as incorrect.
• The ATO has publicly warned taxpayers to “stop claiming private expenses as work deductions” and highlighted internet apportionment (excluding kids’ downloads and streaming) as an audit focus.

Quantified impact

Example: Employee working from home full‑time, using the fixed rate and incorrectly claiming separate internet:

• Hours worked from home: 40 hours/week × 48 weeks = 1,920 hours/year.
• Fixed rate claim: 1,920 × $0.70 = $1,344 deduction, already including internet.
• Typical annual NBN bill: say $80/month × 12 = $960, of which they claim 80% work‑related = $768.
• Total claimed (incorrect): $1,344 + $768 = $2,112.
• Correct claim (fixed rate only): $1,344.
• Over‑claim = $768 per year – which the ATO can disallow and may charge interest and penalties.

Old vs better comparison

• Before the revised fixed rate, people commonly claimed a smaller per‑hour rate plus separate internet and phone, which encouraged complex split calculations and more errors.
• Under the new 70c fixed rate, “phone and internet expenses are included” and cannot be claimed separately if you choose this method.
• A “better” compliant scenario is:
• Either use fixed rate only, accepting that it fully covers internet and phone; or
• Use actual cost method and stop using the fixed rate entirely, apportioning each bill correctly.

Regulator/source: ATO – Working from home expenses and Deductions for home‑based business expenses.

The second, compounding trap

Mechanism: Mis‑apportioning home office and internet — claiming private use as work.

The ATO requires three conditions to claim home office expenses: you must actually incur an expense, it must relate to earning your income, and you must keep records.

For mixed‑use costs (home internet, phone, shared study), the ATO states you can only claim the work‑related portion and must apportion correctly.

Common errors:

• Claiming 100% of an internet bill even though family use, gaming and streaming are substantial private use.
• Claiming a full room’s energy costs even when that room is used partly for private purposes (e.g. shared study or spare bedroom).

How apportionment should work (ATO guidance)

• For phone/internet, the ATO accepts methods such as a representative 4‑week diary to work out the work‑use percentage.
• For home office running costs, you can use:
• Floor area method – e.g. a 10 m² office in a 100 m² home → 10% of relevant running expenses can be claimed.
• Time‑based method – e.g. room used 100 hours per week, with 40 hours for work → 40% work use.

Quantified cost of mis‑apportionment

Assume:

• Annual internet bill: $960 (as above).
• True work‑related use based on a 4‑week diary: 50% → legitimate deduction $480.
• Taxpayer incorrectly claims 80% → $768.
• Over‑claim on internet alone: $288 per year.

For energy:

• Annual electricity/gas for the home: $2,000 (illustrative).
• Dedicated office is 10% of floor area, used for work 40% of the time.
• Appropriate apportionment could be: 10% × 40% = 4% of energy costs → $80 deductible.
• If the taxpayer claims 10% without time adjustment, they claim $200.
• Over‑claim: $120 per year on energy.

Long‑run cost

If the ATO audits and adjusts these claims over a 10‑year working‑from‑home period:

• Internet over‑claim: $288 × 10 = $2,880.
• Energy over‑claim: $120 × 10 = $1,200.
• Total incorrect deductions: $4,080.

On top of this, the ATO can impose shortfall interest charge and administrative penalties, effectively increasing the long‑run cost of getting it wrong.

Regulator/source: ATO – Working from home expenses and home‑based business deductions; ATO‑linked commentary on crackdown.

What this looks like in practice

Persona:

• Name: Jess
• Age: 34
• Job: Marketing manager (employee) working hybrid, 3 days a week from home.
• Salary: $110,000 per year (taxable income).
• Home situation: Renting a 2‑bedroom unit; uses second bedroom as a home office.
• Years to retirement: 31 years (target age 65).
• Internet bill: $80/month = $960/year.
• Electricity/gas: $2,000/year.
• Work‑from‑home hours: 3 days/week × 8 hours × 48 weeks = 1,152 hours/year.

Discovery 1 – Fixed rate already covers her internet

Using the ATO fixed‑rate method:

• Jess can claim 70c per hour for 1,152 hours, giving a deduction of 1,152 × $0.70 = $806.40.
• This amount already includes her work‑related share of internet and phone, plus energy and consumables.
• She realises her previous separate internet claim (80% of $960 = $768) was in addition to the per‑hour rate, effectively double‑claiming $768.

Discovery 2 – She can’t claim rent as an employee

• As an employee, Jess can claim running expenses (electricity, phone, internet, decline in value of office equipment) but generally cannot claim occupancy expenses like rent, mortgage interest, council rates, or home insurance.
• She had thought a “home office” meant she could claim a percentage of her rent; she learns the ATO treats these as private costs for employees.

Discovery 3 – Correct apportionment slashes her phone/internet deduction

After keeping a 4‑week usage diary, Jess finds:

• Work‑related internet use is 50%, not 80%.
• Correct annual internet deduction under actual method: $960 × 50% = $480.
• Work‑related mobile phone use is 40% of her $60/month plan → $720/year × 40% = $288 deductible.
• Compared with her previous practice (claiming 80% of both: internet $768, phone $576), she was over‑claiming:
• Internet: $768 − $480 = $288.
• Phone: $576 − $288 = $288.
• Total: $576 per year over‑claimed in phone/internet deductions.

The full cost of doing nothing

Using Jess’s situation, combining Problem 1 (double‑claiming) and Problem 2 (mis‑apportionment):

• Problem 1: She incorrectly claimed the fixed rate + separate internet:

• Fixed rate: $806.40 (correct).

• Separate internet at 80%: $768 (incorrect – already covered by fixed rate).

• Over‑claim from double‑dipping: $768 per year.

• Problem 2: She overstated work‑related internet and phone usage:

• Correct internet (50%): $480 vs claimed $768 → $288 over‑claimed.

• Correct phone (40% of $720 = $288)** vs claimed $576 → $288 over‑claimed.

• Total mis‑apportionment: $576 per year.

If she mixes both errors (as many taxpayers do):

• Combined annual over‑claim: $768 (double‑dip) + $576 (mis‑apportion) = $1,344 per year.

Modelling basis (assumptions):

• Jess works 1,152 hours/year from home over 31 years of remaining career.
• She persists with the same mistakes without audit:
• Lifetime incorrect deductions: $1,344 × 31 ≈ $41,664.

If the ATO audits and removes these deductions retrospectively for 10 tax years, she could lose:

• $1,344 × 10 = $13,440 in claimed deductions, plus interest and penalties.

The headline impact: tens of thousands of dollars of “phantom” deductions Jess thought she had, which can evaporate in an audit, and years of refunds potentially being reversed.

What to do about it

1. Check if you’re double‑claiming under the fixed‑rate method

1. Action: Audit your return for any separate internet or phone claims if you’re using the 70c fixed rate.
2. Tool/portal:

• myGov → ATO online services → Income tax returns → Deductions (review “Working from home” and “Phone/Internet” sections).

3. Steps:

• Log into myGov, link/open the ATO service.
• Open your latest tax return and go to the Deductions schedule.
• Look for “Working from home” entries using the fixed‑rate amount and check whether you also entered separate phone or internet expenses.

4. What “good” looks like:

• If you use the fixed‑rate method, you should not also have separate work‑from‑home internet or phone entries; these should be included in the 70c/hour rate.

2. Switch to the actual cost method if your bills are high and your office is dedicated

1. Action: Compare the fixed‑rate deduction against an actual cost calculation to see which is higher and compliant.
2. Tool/portal:

• ATO – Working from home expenses guidance, plus your utility, phone, and internet bills and a 4‑week diary.

3. Steps:

• Gather 12 months of electricity/gas, internet, and phone bills, and note your home office’s floor area vs total home area.
• Record your work‑from‑home hours and keep a 4‑week diary for phone/internet usage to determine work‑related percentages.
• Calculate:
• Fixed rate: hours × $0.70.
• Actual: sum of each bill × work‑use % (and floor‑area/time where relevant).
• Choose the method that yields a higher deduction and meets record‑keeping rules.

4. What “good” looks like:

• Your chosen method is consistently applied each year; you have receipts and diaries supporting your calculations; and you’re only claiming the work‑related portion of each expense.

3. Document your home office conditions to avoid claiming occupancy when you shouldn’t

1. Action: Confirm whether you’re an employee or home‑based business, and align your claims with the ATO rules on running vs occupancy expenses.
2. Tool/portal:

• ATO – Deductions for home‑based business expenses and Working from home expenses webpages.

3. Steps:

• Identify whether your home is a principal place of business (sole trader/freelancer) or merely where you sometimes perform employee duties.
• If you’re an employee, review your return for any rent/mortgage/rates/home‑insurance claims and remove them; these are generally private and non‑deductible.
• If you run a home‑based business, document how your office has the character of a “place of business” (e.g. signage, separate entry, mainly business use) and apportion occupancy and running expenses accordingly.

4. What “good” looks like:

• Employees: only running expenses claimed (no rent/rates), apportionment documented.
• Home‑based businesses: occupancy claims limited to areas with place‑of‑business character, with floor‑area and usage calculations on file.

A myth worth clearing up

Myth: “If I have a home office, I can claim my rent and the full cost of my internet and bills.”

Fact: The ATO states that employees generally cannot claim occupancy expenses like rent or mortgage interest, and can only claim the work‑related portion of mixed‑use costs such as internet, phone, and energy. For home‑based businesses, occupancy expenses are only deductible where the area has the character of a ‘place of business’, and all claims must be apportioned to the business portion.

Sources

• https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions/deductions-for-home-based-business-expenses
• https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/working-from-home-expenses
• https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim

Researched 2026-06-24.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.