Work-Related Tax Deductions in Australia: Rules, Records and Examples

The three basic rules

The ATO summarises three basic rules for work-related deductions: you spent the money and were not reimbursed; the expense directly relates to earning your income; and you have a record to prove it, unless a specific exception applies.

If an expense is partly work and partly private, claim only the work-related portion. Buying an item through a work account does not automatically make it deductible.

• ✓ You paid the expense yourself
• ✓ Your employer did not reimburse it
• ✓ It directly relates to earning your income
• ✓ You can substantiate the claim
• ✓ You remove the private portion

Related guide: Estimate your tax refund →

Common categories—not automatic entitlements

Potential categories include working-from-home costs, tools and equipment, protective clothing, occupation-specific clothing, self-education, union fees and some travel between workplaces. Each category has its own conditions.

Ordinary clothing, normal travel from home to a regular workplace and private meals are generally private, even if work requires a certain appearance, an early start or eating away from home.

• ✓ Home-office running expenses
• ✓ Tools, equipment and decline in value
• ✓ Protective or occupation-specific clothing
• ✓ Professional subscriptions and union fees
• ✓ Eligible self-education
• ✓ Travel between separate workplaces in qualifying circumstances

Related guide: PAYG withholding vs final tax →

Records and apportionment

Keep receipts or other written evidence, and retain calculations showing how you separated work use from private use. A diary, usage log or reasonable work-use pattern may be needed depending on the expense and method.

Do not create a round-number claim simply because you believe it is under a receipt threshold. Exceptions to written evidence do not remove the requirement to have actually incurred the expense and be able to explain the calculation.

Example: A laptop used 60% for employment and 40% privately cannot generally be treated as 100% work-related. The deductible amount may also be spread through decline-in-value rules rather than claimed immediately.

Related guide: Medicare levy explained →

Working from home in 2025–26: choose one method

For 2025–26, the ATO fixed-rate method is 70 cents for each recorded hour worked from home. The rate covers additional energy, home and mobile internet or data, phone usage, stationery and computer consumables. You must keep a record of the total hours worked from home and evidence that you incurred the covered expenses.

Do not separately claim an expense already covered by the fixed rate. Eligible decline in value of work equipment and some other costs not included in the rate may be claimed separately under their own rules. Alternatively, the actual-cost method requires records and a reasonable work-use calculation for the actual additional expenses.

• ✓ Fixed rate: 70 cents per recorded work-from-home hour for 2025–26
• ✓ Keep an actual record of hours for the income year
• ✓ Keep evidence of covered expenses you incurred
• ✓ Do not claim covered phone, internet, energy or stationery costs twice
• ✓ Apply separate eligibility and decline-in-value rules to equipment

Example: If your records show 420 eligible work-from-home hours, the fixed-rate component is 420 × $0.70 = $294. Enter the final eligible claim once; do not add the same covered internet or electricity costs again.

Use the ToolsFA calculator step by step

Work out each deduction under the relevant ATO rules before opening the calculator. Add only eligible employment expenses to Work-related deductions, place qualifying gifts in Deductible gifts and donations, and use Other deductions only for supported amounts that do not belong in the other fields. Keep gross income and PAYG withholding unchanged in their own fields.

Calculate a baseline with no proposed deduction, save the result, then enter the supported deduction and calculate again. Compare taxable income and estimated liability—not just the refund. The calculator accepts a dollar total; it does not decide whether an expense is deductible, calculate work-use percentages, apply decline in value or validate records.

• ✓ Calculate the legal claim before entering it
• ✓ Use each deduction field once
• ✓ Compare identical scenarios except for the deduction
• ✓ Keep the records behind the entered total
• ✓ Confirm complex claims through myTax or a registered tax agent

Example: Assume an eligible $1,200 claim reduces the calculator's estimated included liability by $360. The planning tax effect is $360, not the $1,200 purchase cost. A different income, offset, Medicare or HELP position can produce a different result.

Estimate the tax effect—not the purchase price

Enter only eligible deductible amounts into the calculator. The result shows how taxable income changes; it should not label the whole expense as a refund. Keep the estimate separate from the decision about whether the claim is legally available.

The quick tool does not prepare the deduction schedules used in myTax and does not model every category-specific limit, substantiation exception, depreciation rule or reimbursement. Its purpose is to show how a supported total could affect the included annual estimate.