Tax Deductions
Written in plain language for general understanding. This is educational content, not legal advice. Based on Commonwealth Acts of Parliament, federal regulations, and official government guidance.
What is this right?
Under Section 8-1 of the ITAA 1997, you can claim a deduction for expenses you incur in earning your assessable income, as long as the expense is not private, domestic, or capital in nature.
Work-related deductions are the most common. These include uniforms and protective clothing, tools and equipment, union fees, professional subscriptions, and travel between workplaces. If an expense is partly for work and partly personal, you can only claim the work-related portion.
If you work from home, you can use the ATO's fixed rate method of 67 cents per hour to cover electricity, internet, phone, and stationery. You must keep a record of actual hours worked from home.
Self-education expenses are deductible if the course is directly related to your current job or if it is likely to lead to an increase in your income from your current employment. The course must have a sufficient connection to your current work — you cannot claim a course for a completely new career.
For any deduction over $300, you must have written evidence such as receipts or invoices. Claims of $300 or under still require that you actually spent the money.
When does it apply?
This applies to all taxpayers who spend money to earn income.
- You must have spent the money yourself and not been reimbursed by your employer.
- The expense must be directly related to earning your income.
- You must have a record to prove it (receipt, bank statement, diary log).
What should you do?
- Keep all receipts and records for 5 years from the date you lodge your return.
- Use the ATO app to photograph and store receipts throughout the year.
- Apportion expenses that are partly private — only claim the work percentage.
- If working from home, keep a log of hours worked to use the 67 cents per hour fixed rate.
- Check ATO occupation guides for deductions common to your profession.
What should you NOT do?
- Don't claim expenses your employer paid for or reimbursed you for.
- Don't claim private expenses — commuting from home to your regular workplace is not deductible.
- Don't round up or estimate — claims must reflect actual spending with evidence.
- Don't claim self-education for a new career unrelated to your current job.
- Don't copy another person's deductions — the ATO uses data analytics to flag unusual claims for your occupation and income level.
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