Australian Tax Deductions Checklist 2025-26: Everything You Can Claim (And What You Cannot)

The ATO's three golden rules for any deduction

Before any expense can be claimed, it has to pass all three of the ATO's rules. Fail even one and the claim is invalid:

1. You spent the money yourself and were not reimbursed by your employer
2. The expense directly relates to earning your income
3. You have a record to prove it

For example, if you buy a $200 office chair and use it only for work, you spent the money (rule 1), it relates to earning your income (rule 2), and your receipt proves it (rule 3) — so it is deductible. But if your employer reimbursed you for that chair, rule 1 fails and you cannot claim it. And if you use it half the time for personal study, you can only claim the work-related half. Keep these three rules in mind as you work through everything below — almost every grey area comes back to one of them.

Work-related expenses (the biggest category)

This is where most people's deductions come from. Each item below is claimed at its work-related portion only.

Work from home

Claim $0.70 per hour under the fixed rate method, which covers power, internet, phone and stationery. You need a record of your actual hours for the full year.

Car and travel

Claim work trips (not your commute) at $0.88 per kilometre under the cents-per-kilometre method, up to 5,000 km per year. Beyond 5,000 km you need a logbook.

Phone and internet

Claim the work-use percentage of your actual bills — but not if you are already using the $0.70/hr working-from-home rate, which includes them.

Tools and equipment

Items costing $300 or less can be claimed in full immediately; items over $300 are depreciated over their effective life.

Uniforms and protective clothing

Deductible only if it is a compulsory or registered uniform with a logo, or genuinely protective gear (steel-cap boots, hi-vis, sun protection). Ordinary business attire is not deductible, even if you only wear it to work.

Self-education

Courses that directly relate to your current job are deductible. Study aimed at getting a different future job is not.

Union fees and professional memberships

Union fees, professional association memberships, and subscriptions to professional journals or databases are fully deductible.

Investment deductions

• Rental property expenses: loan interest, council rates, insurance, repairs, property management fees, and depreciation
• Investment management costs: fees for managing your share portfolio or investment advice relating to existing investments
• Franking credits: not a deduction, but they reduce your tax dollar for dollar and are often missed entirely — make sure your dividend statements are entered

Personal and other deductions

• Charitable donations of $2 or more to DGR-registered charities
• Income protection insurance premiums (when the policy is held outside super)
• Last year's tax agent fee — deductible on this year's return
• Personal super contributions you want to claim — but only if you lodge a Notice of Intent to Claim with your fund first

What you CANNOT claim — common mistakes

• Commuting from home to your regular workplace
• Everyday clothes, even if you only wear them to work
• Meals at work (except in specific overnight-travel situations)
• Home internet if you already claim the $0.70/hr WFH rate — it is already included (a very common double-dip)
• The private-use portion of any shared expense
• Anything your employer paid for or reimbursed

What you can claim without receipts

A few categories have ATO record-keeping concessions — but remember, "no receipt" never means "no record":

• Car (cents-per-km method): no receipts, just a record of the trips you made
• Laundry of work uniforms: up to $150 without receipts, using a reasonable calculation
• Total claims of $300 or less: if all your work-expense claims add up to $300 or less, you do not need written evidence — but you must show how you worked them out
• Small expenses: items of $10 or less, up to $200 in total, can be recorded yourself instead of kept as receipts

The most commonly overlooked deductions

If you do nothing else, check these — they are the ones people forget most:

1. Work-from-home hours (many people never track them)
2. Work car trips between sites (not the commute)
3. Union fees deducted automatically from your pay
4. Last year's tax agent fee
5. Income protection insurance premiums
6. Charitable donations (the receipt must say "tax deductible")

How much is a deduction actually worth?

A deduction does not come straight off your tax bill — it lowers your taxable income, and the tax you save depends on your marginal rate. The same $1,000 of deductions is worth different amounts to different people:

This is why it pays to claim everything you are genuinely entitled to: a few hundred dollars of forgotten deductions can be the difference between a small refund and a much larger one. It also explains why the same claim is worth more, in dollars, to a higher earner.

How to keep records the easy way

The single biggest reason people miss out is poor records. A few simple habits make tax time painless:

• Keep a running note of your work-from-home hours as you go, not at the end of the year
• Photograph receipts the day you get them, or use the ATO's myDeductions tool in the ATO app
• Keep a simple log of work car trips — date, reason, and kilometres
• Hold on to all records for 5 years from the date you lodge