A recent Full Federal Court decision has sent a clear message to Australian taxpayers: working from home during COVID-19 did not automatically make your rent or daily travel tax deductible.

The background

The case involved a full-time sports presenter and producer at the ABC. During the 2021 income year, COVID-19 restrictions meant he performed one of his roles from a second bedroom in his rented Melbourne apartment, while continuing to travel to the ABC's Southbank Studios for his other role.

He claimed deductions for two things:

• A proportion of his apartment rent as an occupancy expense (home office)
• Car expenses for driving between his home and the ABC studio

The Administrative Review Tribunal originally sided with the taxpayer and allowed both deductions in full. The ATO appealed — and won.

What the Full Federal Court decided

On the home office claim, the Court found that the essential character of the rent paid was to secure domestic accommodation. The fact that pandemic restrictions required him to work from home did not change the nature of that expense or make it deductible. Put simply, he was paying rent to live there — not to run a place of business.

On the car expense claim, the Court drew an important distinction: the travel between his home and the ABC studio was travel to work, not travel on work. That distinction matters enormously under Australian tax law. Ordinary home-to-work travel has never been deductible, and a pandemic-era work-from-home arrangement didn't change that.

Why this matters for you

This decision is a timely reminder that the rules around home office and travel deductions are strict — and that context alone (such as being required to work from home) doesn't automatically create a deduction.

If you're claiming home office expenses, the deduction must relate to a genuine, dedicated work area — not a shared or domestic space that happens to be used for work. And if you're claiming car expenses for travel between home and your regular place of employment, that travel is almost always considered private — regardless of the circumstances that put you at home in the first place.

What you should do

If you're unsure whether your home office or travel claims are on solid ground, now is a good time to review them before your next tax return is lodged. The ATO is paying close attention to these categories, and this decision gives them a stronger platform to challenge claims that don't meet the standard.

Reach out to our team and we'll help you work through what's legitimately deductible in your situation — and make sure your return is defensible if questions are ever asked.

This article is general in nature and does not constitute legal or tax advice. Please speak with your adviser regarding your specific circumstances.

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