Working from home and occupancy costs

Recent developments in Australian tax law could impact how healthcare professionals working from home claim deductions. A notable case heard by the Administrative Appeals Tribunal (AAT)—Hall v Commissioner of Taxation—has brought renewed attention to whether occupancy costs such as rent, mortgage interest, home insurance, and council rates can be claimed by employees, including those in healthcare, who are required to work remotely.

Background: Hall’s Case and Its Relevance

Mr Hall, a media professional, was compelled to work from home during the 2020–21 COVID-19 lockdowns. His employer, the ABC, had no office space available due to restrictions, and Mr Hall worked almost exclusively from a designated spare room in his rented apartment to produce content. He was not self-employed; he was a remote employee—just like many healthcare professionals today who consult online or manage administrative tasks from home.

The AAT accepted that Mr Hall’s home office was his only available workplace and ruled that he could claim a proportional deduction for occupancy costs. While this decision isn’t legally binding and only applied to the 2020–21 income year, it sets a persuasive precedent.

How This May Apply to Healthcare Professionals

If you’re a healthcare worker, such as a psychologist, allied health professional, medical administrator, or telehealth provider, and your employer does not provide you with an office, you might be eligible to claim a portion of your home’s occupancy costs, under certain conditions.

Eligibility criteria include:

• You must work from a specific area of your home (e.g. a spare room) that is used exclusively or almost exclusively for work.
• The work-from-home arrangement is not by personal choice—you work from home because your employer requires it or does not offer an alternative office.
• You are either a tenant or a homeowner with a significant mortgage (homeowners must also consider capital gains tax implications—see below).

Setting up a laptop on the dining table isn’t enough. You need a clearly defined workspace, such as a dedicated home office.

Capital Gains Tax (CGT) Warning for Homeowners

If you're a homeowner looking to claim occupancy costs, be aware: the main residence CGT exemption may be reduced if you claim your home is partly used for income-producing purposes. This means:

• You must get a valuation at the time you start using your home office.
• The exemption will be partially forfeited in line with your claimed home office percentage.

If you have no mortgage or a small loan, it may not be worth sacrificing your CGT exemption. In contrast, renters like Mr Hall don’t face this issue.

What About the ATO?

The ATO has yet to respond formally to the Tribunal’s decision in Hall’s case. However, it's expected they may be reluctant to accept widespread occupancy cost claims. To minimise risk:

• File your tax return using the standard running cost method (fixed hourly rate or actual cost).
• Then, lodge an objection to claim occupancy costs after you receive your notice of assessment.

This protects your rights without exposing you to interest or penalties.

There may also be an opportunity to amend past returns if you worked under lockdown conditions and used a home office exclusively. In these cases, an extension request to the ATO may be needed.

When Should You Seek Professional Advice?

You should consider professional tax advice if:

• You’re a healthcare employee who works remotely full-time or part-time.
• Your employer provides no access to office space.
• You have a dedicated space at home used solely for work.
• You’re a renter or a homeowner with significant mortgage interest.

Understanding the balance between tax deductions and future CGT implications is essential.

Need tailored advice? As registered tax agents with experience supporting healthcare professionals, we can guide you through your options and help you lodge a complaint and effective claim. Contact us today to arrange a consultation.