Are You Claiming Work From Home Expenses Correctly?A Guide to ATO Scrutiny and Staying Compliant

As remote and hybrid work models continue to evolve, more Australians—and particularly Aussie expats and offshore businesses—are claiming work-from-home (WFH) expenses on their tax returns. However, with that shift has come increased scrutiny from the Australian Taxation Office (ATO).

At World Wide Advisory, we’ve seen how even honest mistakes can lead to red flags, audits, and penalties. If you're earning assessable Australian income while working from abroad or running a business that employs remote workers in Australia, it's critical to ensure you're claiming expenses accurately and in line with ATO rules.

Common Work-From-Home Claim Mistakes

Here are the most frequent errors we see that could trigger ATO attention:

1. Using the Wrong Method

The ATO offers two methods for WFH deductions:

• Fixed Rate Method (67c/hour) – Covers utilities, phone, internet, and stationery.

• Actual Cost Method – Requires specific documentation for each expense.

Mistake: Using the fixed rate while also claiming additional overlapping expenses (e.g., electricity and internet twice).

2. Lack of Records

Claims without logs, timesheets, receipts, or clear business-use calculations are a major red flag.

Mistake: Relying on estimates or calendar notes instead of a structured hourly work log or actual usage documentation.

3. Claiming Non-Deductible Items

Some expenses are simply not eligible—even if you're working full-time from home.

Mistake: Trying to deduct items like rent (unless part of a dedicated business space), personal mobile use, or household items like coffee or décor.

4. Incorrect Apportionment

Only the work-related portion of mixed-use expenses can be claimed.

Mistake: Claiming 100% of your internet bill when it's also used for personal streaming or family use.

ATO’s Increased Audit Focus

The ATO has publicly stated that WFH expenses are under increased scrutiny due to a surge in claims. This is especially true for:

• Expats working overseas but still reporting Australian income.

• Digital nomads claiming deductions while outside Australia.

• Businesses reimbursing remote workers without proper documentation.

If you’re classified as an Aussie non-resident for tax purposes, you may have limited or no eligibility to claim certain deductions unless directly tied to Australian-sourced income.

How to Get It Right

Here’s what you can do to stay compliant and avoid costly mistakes:

✅ Choose the Right Method

Review your situation to determine whether the fixed rate or actual cost method gives you the best result with full compliance.

✅ Keep Comprehensive Records

Maintain:

• A 12-week log of hours worked

• Receipts for purchases over $10

• Utility bills, phone/internet statements

• Proof of work-related usage percentages

✅ Separate Work vs Personal Use

For any shared-use expenses (e.g. internet or electricity), calculate the actual business use based on reasonable and consistent methods.

✅ Consult a Specialist

Expats and offshore businesses have added complexity. Factors such as residency status, foreign income, and ATO reporting obligations must be aligned with your expense claims.

Work-from-home deductions can reduce your taxable income—but only if they’re accurately calculated and properly documented. For Aussie expats and international businesses, getting this wrong can open the door to unexpected ATO penalties.

Let World Wide Advisory help you navigate the details and ensure your claims are fully compliant and optimised.

📞 Call us at +617 3180 1684

📧 Or email us at contact@worldwideadvisory.au

Our team provides practical, expert advise tailored to Aussie expats, remote professionals, and offshore businesses with Australian tax exposure.