Work From Home Tax Deductions in Australia 2024-25

Millions of Australians work from home either full-time or part-time. The ATO allows eligible taxpayers to claim deductions for the costs of working from home. Understanding which method to use can make a significant difference to your tax return.

The Two Methods Available

The ATO offers two ways to calculate work from home deductions for the 2024-25 financial year.

1. The Fixed Rate Method (67 cents per hour)

The revised fixed rate method allows eligible taxpayers to claim 67 cents for each hour worked from home during 2024-25. This rate covers electricity and gas expenses, internet expenses (work-related portion), phone expenses (work-related portion), and stationery and computer consumables.

To use this method, taxpayers are generally required to keep a record of the actual hours worked from home throughout the entire income year. A four-week representative diary is no longer accepted under the revised method.

2. The Actual Cost Method

The actual cost method allows taxpayers to claim the actual work-related portion of each expense individually. This includes a portion of home occupancy expenses such as rent or mortgage interest, council rates and home insurance — but only if the area used is exclusively set aside for work.

This method requires more detailed record keeping but may result in a larger deduction for some taxpayers, particularly those who have a dedicated home office used only for work.

What the Fixed Rate Method Covers

Under the 67 cents per hour fixed rate, the following are already included and generally cannot be claimed separately: electricity and gas for heating, cooling and lighting the work area; home and mobile internet used for work; mobile and home phone expenses used for work; and stationery and computer consumables such as printer ink.

What Can Be Claimed Separately

Regardless of which method is used, the following can generally be claimed separately if they are used for work: decline in value of depreciating assets such as computers, chairs and desks; repairs and maintenance of work-related equipment; cleaning costs for a dedicated work area; and occupancy expenses under the actual cost method only.

Record Keeping Requirements

The ATO requires taxpayers to keep records to substantiate work from home claims. Under the fixed rate method, this means a record of all hours worked from home for the entire year — not just a sample period. Under the actual cost method, receipts and evidence of all actual expenses are required.

Common Mistakes to Avoid

Some common errors include claiming internet and phone costs separately when already using the fixed rate method, not keeping records of actual hours worked, and claiming home occupancy costs without having a genuinely dedicated work area.

Negative Gearing in Australia: A General Overview

Negative gearing is one of the most discussed concepts in Australian property investment and tax. Understanding how it generally works can help property investors have more informed conversations with their tax agent.

What Is Negative Gearing?

A property is generally considered negatively geared when the deductible expenses associated with owning the property exceed the rental income it generates. The resulting loss can generally be offset against other assessable income, such as salary or wages, which may reduce the investor's overall tax liability.

For example, if a rental property generates $25,000 in annual rent but costs $35,000 in deductible expenses (interest, rates, repairs, depreciation), the $10,000 shortfall is a net rental loss that may be deductible against other income.

What Expenses Are Generally Deductible?

Common deductible expenses for rental properties in Australia generally include interest on the investment loan, council rates and water charges, property management fees, repairs and maintenance (not capital improvements), landlord insurance, accounting fees, and depreciation on plant and equipment and the building (where applicable).

Capital expenses — such as renovations that improve the property beyond its original condition — are generally not immediately deductible but may be claimed over time as capital works deductions.

Positively Geared vs Negatively Geared

When rental income exceeds deductible expenses, the property is positively geared and the net income is assessable. When expenses exceed income, the property is negatively geared and the loss may be deductible. The tax treatment of each situation differs and depends on the taxpayer's individual circumstances.

Capital Gains Tax Considerations

When an investment property is sold, capital gains tax (CGT) may apply to any profit. Properties held for more than 12 months are generally eligible for a 50% CGT discount for individuals. This means only half the capital gain is included in assessable income. CGT is a complex area and individual outcomes depend heavily on specific circumstances.

Depreciation and Capital Works

Investors may also be able to claim depreciation on plant and equipment (dishwashers, carpets, air conditioning) and capital works deductions at 2.5% per year on the construction cost of the building. A quantity surveyor's report is often used to establish these values.

Capital Gains Tax in Australia: General Overview

Capital gains tax (CGT) applies when Australians sell or dispose of certain assets for more than they paid for them. Understanding the general concepts can help taxpayers plan more effectively in consultation with their tax agent.

What Is a Capital Gain?

A capital gain generally arises when the sale proceeds of an asset exceed the asset's cost base. The cost base generally includes the original purchase price plus associated costs such as stamp duty, legal fees and capital improvement costs. The capital gain forms part of the taxpayer's assessable income in the year the asset is sold.

The 50% CGT Discount

Individuals and trusts who have held a CGT asset for more than 12 months are generally eligible for a 50% CGT discount. This means only half the capital gain is included in assessable income. Companies are not eligible for the 50% discount. The discount does not apply to assets held for less than 12 months.

Common CGT Assets

Common assets subject to CGT in Australia include investment properties, shares and managed funds, cryptocurrency, collectibles over $500 in value, and business assets. The family home is generally exempt from CGT under the main residence exemption, subject to certain conditions.

The Main Residence Exemption

The main residence exemption generally means that a property used as the taxpayer's main home is exempt from CGT. However, the exemption may be reduced if the property was rented out for a period, used for income-producing purposes, or was not the taxpayer's main residence for the entire ownership period. The rules around the main residence exemption are complex.

CGT Events

CGT is triggered by a CGT event — the most common being the sale or disposal of an asset. Other CGT events include entering into certain contracts, granting options, and receiving compensation. The ATO identifies over 50 different CGT events.

Capital Losses

Capital losses arise when an asset is sold for less than its cost base. Capital losses can generally only be offset against capital gains — they cannot be offset against ordinary income. Unused capital losses can generally be carried forward to future income years.

Salary Sacrificing Into Super: A General Overview

Salary sacrificing into superannuation is a common strategy used by Australian employees to direct some pre-tax salary into their super fund. Understanding how it generally works can help employees have more informed conversations with their employer and financial adviser.

What Is Salary Sacrificing?

Salary sacrificing involves an employee agreeing with their employer to forgo a portion of their future salary or wages in return for the employer providing a benefit of a similar value. When the benefit is a contribution into superannuation, this is known as salary sacrificing into super.

Because the contribution comes from pre-tax income, it is generally taxed at the concessional contributions tax rate of 15% within the super fund — rather than at the employee's marginal income tax rate which may be higher.

Concessional Contributions Cap

Salary sacrifice contributions count toward the concessional contributions cap. For 2024-25, the concessional contributions cap is $30,000 per year. This includes employer Superannuation Guarantee (SG) contributions of 11.5% as well as any salary sacrifice contributions. Contributions above the cap are generally included in assessable income and taxed at the marginal rate.

Who May Benefit

Salary sacrificing into super is generally considered more tax-effective for individuals whose marginal tax rate exceeds 15%. For low-income earners whose marginal rate is at or below 15%, there may be less tax benefit and other considerations apply. Individual circumstances vary significantly.

How to Arrange Salary Sacrifice

To salary sacrifice into super, an employee generally needs to enter into a salary sacrifice agreement with their employer before the income is earned. The arrangement cannot be applied retrospectively. Not all employers offer salary sacrifice arrangements, so it is worth checking with your employer whether this is available.

Impact on Other Entitlements

Salary sacrificing may affect certain entitlements that are calculated based on ordinary time earnings or base salary, such as some leave entitlements and certain Centrelink payments. Individual impacts depend on specific employment conditions and circumstances.

GST Registration in Australia: General Overview

Goods and Services Tax (GST) is a broad-based tax of 10% applied to most goods, services and other items sold in Australia. Understanding when registration is generally required and how GST works is important for business owners.

When Is GST Registration Generally Required?

The ATO requires businesses to register for GST when their current or projected annual turnover is $75,000 or more. For non-profit organisations, the threshold is $150,000. Taxi and rideshare drivers are required to register for GST regardless of their turnover.

Businesses with turnover below $75,000 can choose to register voluntarily. Once registered, businesses must charge GST on taxable sales and can claim GST credits on business purchases.

How GST Generally Works

Registered businesses generally collect GST on behalf of the ATO by adding 10% to the price of taxable goods and services sold. They can then claim credits for the GST included in the price of business purchases. The difference between GST collected and GST credits is paid to or refunded by the ATO through the Business Activity Statement (BAS).

GST-Free and Input-Taxed Supplies

Not all goods and services attract GST. Some are GST-free — meaning they carry a zero GST rate. Common GST-free supplies include most basic food, some education courses, some medical services and exports. Input-taxed supplies — such as financial services and residential rent — do not attract GST, and businesses cannot claim GST credits on related purchases.

How to Register

Businesses can register for GST online through the ATO's Business Portal, through their registered tax agent, or when applying for an ABN. Registration typically takes effect from the date of application or an agreed later date.

BAS Lodgement

Registered businesses are required to lodge a Business Activity Statement (BAS) reporting their GST collected and credits. Most small businesses lodge quarterly, though monthly and annual options are available in some circumstances. BAS must be lodged and payment made by the due date.

Australian Tax Return Checklist 2024-25: General Guide

The 2024-25 income year ends on 30 June 2025. Individuals who need to lodge a tax return generally have until 31 October 2025 to do so (or later if using a registered tax agent). The following is a general checklist of information commonly needed.

Personal Information

Generally required: Tax File Number (TFN), date of birth, current address and bank account details for any refund. If circumstances have changed — such as a change of address or bank account — these should be updated with the ATO.

Income Information

Common income items include payment summaries or income statements from employers (available through myGov), ABN income from sole trader activities, rental income from investment properties, dividends and franking credits from shares, interest from bank accounts, government payments such as Centrelink or JobSeeker, and any capital gains from the sale of assets.

Work-Related Deductions

Common deductible work expenses include work from home costs (using the ATO fixed rate or actual cost method), work-related travel, uniform and protective clothing, tools and equipment, self-education expenses directly related to current employment, and professional membership fees.

The ATO requires taxpayers to have incurred the expense themselves, not been reimbursed, and the expense must directly relate to earning assessable income. Receipts and records are generally required for claims over $300.

Investment and Property Deductions

For rental properties, deductible expenses generally include interest on the investment loan, council rates, property management fees, insurance, repairs and maintenance, and depreciation. For share investors, tax advice costs and some borrowing costs may be deductible.

Other Common Deductions

Other commonly claimed deductions include income protection insurance premiums (if paid personally, not from super), donations to deductible gift recipients (DGR), personal super contributions where a deduction is claimed, and tax agent fees from the previous year.

Key 2024-25 Figures

Tax-free threshold: $18,200. Low income tax offset (LITO): up to $700. Medicare levy: 2% of taxable income (low income exemptions apply). Superannuation guarantee rate: 11.5%.

Small Business Tax Obligations in Australia: General Overview

Australian small businesses have a number of tax obligations they are generally required to meet. Understanding these obligations at a general level can help business owners stay organised and have more informed conversations with their accountant.

Income Tax

All Australian businesses are required to pay income tax on their taxable income. The rate depends on the business structure. Sole traders pay income tax at individual marginal rates. Companies with annual aggregated turnover below $50 million are generally eligible for the small business company tax rate of 25% for the 2024-25 year.

Businesses are generally required to pay PAYG instalments — quarterly prepayments of estimated income tax — once their income reaches certain thresholds. This spreads the tax liability throughout the year rather than having a large payment at tax time.

Goods and Services Tax (GST)

Businesses with annual turnover of $75,000 or more are generally required to register for GST, charge 10% GST on taxable sales, claim GST credits on business purchases, and lodge a Business Activity Statement (BAS) to report and pay net GST.

PAYG Withholding

Businesses that have employees, or pay certain contractors, are generally required to withhold amounts from payments and remit them to the ATO. This is known as PAYG withholding. The amounts withheld are reported and paid through the BAS or an annual PAYG summary.

Superannuation Guarantee

Employers are generally required to pay superannuation contributions of 11.5% (for 2024-25) of ordinary time earnings for eligible employees. Contributions must generally be paid at least quarterly by the due dates. Failure to pay on time may result in the Superannuation Guarantee Charge which is not tax-deductible.

Business Activity Statement (BAS)

Businesses registered for GST must lodge a BAS. Most small businesses lodge quarterly. The BAS reports GST collected and credits, PAYG withholding, PAYG instalments, and other tax obligations in one statement.

Fringe Benefits Tax

Businesses that provide non-cash benefits to employees — such as cars, entertainment or loans — may have fringe benefits tax (FBT) obligations. The FBT year runs from 1 April to 31 March, separate from the income tax year.

Investment Property Tax in Australia: General Overview

Investment properties have specific tax treatment under Australian tax law. Understanding the general concepts can help property investors make more informed decisions in consultation with their tax agent.

Rental Income Is Generally Assessable

All rental income received from an investment property is generally assessable income and must be declared in the tax return. This includes regular rent, bond money retained, insurance payouts for lost rent, and letting fees charged to tenants.

Deductible Expenses

Many expenses associated with owning a rental property are generally deductible. Common deductible expenses include interest on investment loans, council rates and water charges, land tax, property management and agent fees, insurance premiums, repairs and maintenance (not capital improvements), accounting fees for managing the property, and depreciation on plant and equipment.

Capital improvements — such as adding a new room or replacing a kitchen — are generally not immediately deductible but may be claimed as capital works deductions at 2.5% per year over 40 years.

Depreciation and Capital Works

Investors can generally claim depreciation on plant and equipment items such as dishwashers, carpets, blinds and air conditioning units. A depreciation schedule prepared by a quantity surveyor is commonly used to support these claims. Capital works deductions of 2.5% per year may also apply to the construction cost of the building where the property was built after 15 September 1987.

Negative Gearing

When deductible expenses exceed rental income, the property is negatively geared and the net loss may generally be offset against other assessable income such as salary. When income exceeds expenses, the property is positively geared and the net income is assessable.

Capital Gains Tax on Sale

When an investment property is sold, any capital gain is generally subject to capital gains tax. Properties held for more than 12 months are generally eligible for the 50% CGT discount for individual investors. The gain is calculated as the sale price less the cost base (purchase price plus associated costs).

Record Keeping

The ATO requires investors to keep records for all rental income and expenses, as well as records to establish the cost base of the property for CGT purposes. Records should generally be kept for at least five years after the property is sold.

Rental Property Deductions: General Checklist 2024-25

Australian rental property owners can generally claim deductions for a wide range of expenses. The following is a general overview of commonly deductible items based on ATO guidance for 2024-25. Individual eligibility depends on specific circumstances.

Interest and Borrowing Costs

Interest charged on loans used to purchase or maintain a rental property is generally deductible. Borrowing costs such as loan establishment fees and title search fees are generally deductible over five years or the loan term, whichever is shorter.

Council Rates, Water and Land Tax

Council rates, water charges and land tax are generally deductible for periods the property is rented or available for rent. If the property is only available for rent for part of the year, only the proportionate amount is generally deductible.

Insurance

Building insurance, contents insurance and landlord insurance premiums are generally deductible. Income protection insurance relating to rental income may also be deductible.

Property Management and Agent Fees

Fees charged by a property manager or letting agent — including management fees, letting fees and lease renewal fees — are generally fully deductible.

Repairs and Maintenance

Repairs that restore the property to its original condition are generally immediately deductible. Improvements that go beyond restoration are generally capital improvements and not immediately deductible — they may be claimed as capital works deductions at 2.5% per year.

Depreciation and Capital Works

Plant and equipment items such as dishwashers, carpets and air conditioning units can generally be depreciated over their effective life. Capital works deductions of 2.5% per year may apply to the construction cost of buildings built after 15 September 1987.

Medicare Levy and Medicare Levy Surcharge

Most Australian taxpayers pay the Medicare levy to help fund the public health system. Some higher-income earners without private hospital cover also pay the Medicare levy surcharge (MLS).

The Medicare Levy

The Medicare levy is generally 2% of an individual's taxable income. For 2024-25, the Medicare levy low-income threshold for individuals is $26,000 — below this amount, no Medicare levy applies. A reduced levy applies between the threshold and a phase-in amount.

Medicare Levy Exemptions

Some taxpayers may be eligible for a full or half Medicare levy exemption, including certain temporary visa holders not entitled to Medicare benefits, some seniors and pensioners, and in some circumstances people with certain medical conditions.

The Medicare Levy Surcharge (MLS)

The MLS is an additional levy on top of the standard Medicare levy. It applies to individuals whose taxable income exceeds $93,000 (2024-25) and who do not have complying private hospital cover for the full income year. For families, the combined income threshold is $186,000.

MLS Rates for 2024-25

For individuals earning $93,001–$108,000, the MLS rate is 1%. For $108,001–$144,000, the rate is 1.25%. For $144,001 and above, the rate is 1.5%. These rates apply to full taxable income, not just the amount above the threshold.

Private Hospital Cover and the MLS

Taking out complying private hospital cover with an excess no greater than $750 (singles) or $1,500 (families) generally avoids the MLS. Whether this is worthwhile depends on individual circumstances.

Superannuation Contributions Tax: General Overview

Superannuation contributions are taxed differently depending on whether they are concessional or non-concessional. Understanding the general rules can help Australians make more informed super decisions.

Concessional Contributions

Concessional contributions are made from pre-tax income and include employer SG contributions, salary sacrifice contributions, and personal contributions for which a tax deduction is claimed. They are generally taxed at 15% within the super fund. For higher-income earners (income over $250,000), an additional 15% Division 293 tax may apply.

Concessional Contributions Cap 2024-25

The concessional contributions cap for 2024-25 is $30,000. This includes all employer SG contributions and any salary sacrifice or personal deductible contributions. Contributions above the cap are generally included in assessable income and taxed at the marginal rate, with an offset for the 15% already paid within the fund.

Non-Concessional Contributions

Non-concessional contributions are made from after-tax income and are generally not taxed again within the super fund. The non-concessional cap for 2024-25 is $120,000 per year. Individuals under 75 with a total super balance below $1.9 million may be able to bring forward up to three years of contributions ($360,000) subject to conditions.

Personal Deductible Contributions

Eligible individuals including self-employed people can generally make personal contributions and claim a tax deduction for them. A notice of intent to claim a deduction must be lodged with the super fund before lodging the tax return.

Fringe Benefits Tax (FBT): General Overview

Fringe Benefits Tax (FBT) is a tax paid by employers on certain non-cash benefits provided to employees. Understanding the general concepts is important for business owners who provide benefits to staff.

What Is a Fringe Benefit?

A fringe benefit is generally a benefit provided to an employee in addition to their salary. Common examples include private use of a company car, car parking, entertainment, low-interest loans, housing, and expense payments such as gym memberships or private health insurance.

The FBT Year

The FBT year runs from 1 April to 31 March — different from the income tax year. Employers who provide fringe benefits must lodge an FBT return and pay any FBT owing by 21 May (or later with a registered tax agent).

FBT Rate

The current FBT rate is 47%. FBT is calculated on the grossed-up taxable value of the benefit, which is intended to put the employer in a similar position to if they had paid a cash salary instead.

Common FBT Exemptions

Many benefits are exempt from FBT including work-related items such as laptops, mobile phones and tools of trade (one of each per employee per FBT year), minor benefits under $300 that are infrequent, and portable electronic devices used primarily for work.

Cars and FBT

Cars available for private use by employees are one of the most common FBT items. The taxable value is generally calculated using either the statutory formula method or the operating cost method. A 12-week logbook is required for the operating cost method.

Cryptocurrency Tax in Australia: General Overview

The ATO has published guidance on how cryptocurrency is treated for Australian tax purposes. Understanding the general rules is important for anyone who buys, sells, mines or uses cryptocurrency.

Cryptocurrency Is an Asset, Not Currency

The ATO generally treats cryptocurrency as a capital gains tax (CGT) asset, not as foreign currency. Disposing of cryptocurrency — by selling it, exchanging it, using it to buy goods or services, or giving it away — generally triggers a CGT event.

Capital Gains Tax on Cryptocurrency

When cryptocurrency is sold or disposed of, a capital gain or loss is generally calculated as the proceeds minus the cost base. If held for more than 12 months, the 50% CGT discount may apply to individuals. Capital losses can generally only be offset against capital gains, not ordinary income.

Cryptocurrency as Income

In some circumstances, cryptocurrency received may be assessable as ordinary income rather than a capital gain. This generally applies to cryptocurrency received in the course of business activities, mining income where carried on as a business, and some staking rewards.

Record Keeping

The ATO requires records of all cryptocurrency transactions including the date, value in AUD at the time, purpose and exchange records. Crypto tax software tools are commonly used to compile these records from exchange data.

Australian Tax Offsets: General Overview

Tax offsets directly reduce the amount of tax payable — unlike deductions, which reduce taxable income. Understanding the main tax offsets available in Australia can help taxpayers understand their overall tax position.

Low Income Tax Offset (LITO)

The LITO is available to Australian residents with taxable income below $66,667. For 2024-25, the maximum LITO is $700 for individuals with taxable income up to $37,500. It reduces progressively for incomes between $37,500 and $66,667. LITO can reduce tax payable to zero but is not refundable.

Low and Middle Income Tax Offset (LMITO)

The LMITO was a temporary offset that applied from 2018-19 to 2021-22. It no longer applies from 2022-23 onwards. Taxpayers should be aware that returns from 2022-23 onward may result in lower refunds compared to recent years partly due to the end of LMITO.

Seniors and Pensioners Tax Offset (SAPTO)

The SAPTO is available to eligible older Australians who meet age and income requirements. For 2024-25, the maximum SAPTO is $2,230 for singles and $1,602 each for couples. SAPTO can reduce tax payable to zero but is not refundable.

Private Health Insurance Rebate

Eligible Australians with private health insurance may be entitled to a government rebate on premiums. The rebate can be claimed as a premium reduction with the insurer or as a tax offset in the return. The percentage depends on age and income.

Franking Credits as Offsets

Franking credits attached to dividends from Australian companies are applied as a tax offset. If franking credits exceed the tax liability, the excess is generally refunded — particularly beneficial for low-income investors and retirees.