Employer Reimbursements and the WFH Deduction

Can I claim WFH expenses my employer reimburses?

No. The ATO lists expenses your employer reimburses among the working from home expenses you can’t claim. The same goes for items your employer provides, such as a work laptop or phone.

This is one of the ATO’s basic rules for every work-related deduction, not just working from home. In its April 2026 tax time release, the ATO repeated that you must have spent the money yourself and not have been reimbursed. A reimbursed cost is one you haven’t borne, so there’s nothing to deduct.

Can I use the fixed rate if my employer reimburses all my running costs?

No. One of the conditions of the fixed rate method is that you incur additional running expenses as a result of working from home. If your employer reimburses all of the running costs the rate covers (energy, phone, internet, and stationery and computer consumables), you haven’t incurred any of them yourself.

That rules out the fixed rate. It doesn’t automatically rule out every work-from-home deduction. If you bought a desk, chair or monitor yourself, for example, and your employer didn’t reimburse it, the decline in value of that equipment is a separate question under the usual rules.

What if my employer reimburses only some costs?

The ATO deals with this case in PCG 2023/1, its guideline for the fixed rate method. The guideline was updated to clarify when the fixed rate can be used if an employer pays or reimburses some, but not all, of your additional running expenses.

The answer depends on which costs are covered and how. For example, your employer might pay your internet bill directly while you pay for electricity and your own phone. Because the details matter, read the relevant part of PCG 2023/1 or ask a registered tax agent before you claim. Two things are clear in any case:

• You can’t claim a separate deduction for the cost that was reimbursed.
• You still need a record of actual hours worked from home and a bill for each running expense you incur, if you use the fixed rate.

We haven’t written a worked example for partial reimbursement here, because the outcome depends on your arrangement and the ATO guideline is the authority on it.

Is a work-from-home allowance taxable?

Yes. The ATO says that if your employer pays you an allowance to cover your working from home expenses, you must include it as income in your tax return.

An allowance is not the same as a reimbursement. A reimbursement pays you back for a cost you’ve already incurred, so you can’t claim that cost. An allowance is a set payment towards your costs, so it’s taxed as income. Getting an allowance doesn’t by itself mean you can claim a deduction. You can claim your work-from-home costs only if you meet the usual conditions, including having the records.

How do the different arrangements compare?

This table sums up the common cases. Check the ATO pages linked above for the detail.

How do I find out what my employer pays?

Check your payslips, your income statement in myGov and your employer’s working from home policy. Reimbursements and allowances are often listed separately on payslips, and an allowance should be clear because you’ll need to declare it.

If you’re not sure whether a payment is a reimbursement or an allowance, ask your payroll team. The difference matters: one means you can’t claim the cost, the other means you declare the payment as income. Ask in writing, and keep the answer with your tax records.

What about equipment my employer pays for?

You can’t claim decline in value for an item your employer provides or reimburses. PCG 2023/1 includes an example of an employee whose employer supplied the computer and reimbursed the desk and chair: the employee couldn’t claim decline in value on any of those items.

If you buy equipment yourself and your employer doesn’t pay you back, its decline in value can be claimed on top of the fixed rate, apportioned for work use. Repairs to that equipment can be claimed too. See what the fixed rate covers for what’s included in the 70 cents and what sits outside it.

Does the $1,000 standard deduction change this?

Not the reimbursement rules, but it changes the decision. From 2026–27, a $1,000 standard deduction applies automatically to people with labour income. It’s reduced by any work-related expenses you itemise, so in effect you get the higher of $1,000 or your itemised work expenses.

If your employer covers most of your costs, your itemised claim may be small, and the standard deduction may be higher. A work-from-home allowance is still income either way. The $1,000 standard deduction guide and the deduction calculator help you compare.

What should I keep if my employer pays some costs?

Keep evidence of what was reimbursed as well as what you paid. That means:

• Your employer’s policy or agreement on working from home costs, if there is one.
• Reimbursement claims and payslips that show reimbursements or allowances.
• Your own bills for each running expense you incur.
• Receipts for equipment you bought and weren’t reimbursed for.
• A record of the actual hours you worked from home for the whole year, if you use the fixed rate.

If you track your hours with WFH Diary and your employer reimburses all your running costs, you can say so in Settings. The report then warns that you can’t use the fixed rate, so you don’t claim it by mistake.

Keep everything for five years from the date you lodge. See the ATO’s WFH record rules for the full list.