Working out what tax deductions you can claim feels confusing — but it doesn't have to be. This guide lists common deductions Australians may be able to claim for the 2025–26 year (to 30 June 2026). It also explains the ATO tests you need to meet, walks through car and home‑office calculations, and tells you what records to keep and for how long.

Quick reference

Quick summary of the headline numbers for 2025–26 (financial year to 30 June 2026).

  • Tax‑free threshold: $18,200
  • Resident tax rates (stage‑3 from 1 July 2024): 0% up to $18,200; 19% $18,201–$45,000; 30% $45,001–$200,000; 45% $200,001 and over
  • Medicare levy: 2% of taxable income for most people
  • Concessional (pre‑tax) super cap: $27,500 per year
  • Car cents‑per‑kilometre method limit: up to 5,000 business km per vehicle per year
  • Logbook period: a representative 12‑week logbook establishes business use percentage for up to five years
  • Record keeping: keep receipts, invoices and records for five years

Useful government pages and services: ATO work‑related expenses (https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Work-related-expenses/), ATO home office (https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Work-related-expenses/Home-office-expenses/), ATO rental property (https://www.ato.gov.au/Individuals/Investing/in-detail/Property/), myGov (https://www.servicesaustralia.gov.au/mygov) and ATO lodge online (https://www.ato.gov.au/Individuals/Lodging-your-tax-return/Lodge-online/).

Prerequisites — who can claim a deduction

You can only claim a deduction if you actually paid the expense, it directly helped you earn your assessable income, and you can back the claim with records such as receipts or invoices. That evidence can be a receipt, invoice, diary entry, logbook or bank statement. The claim also must be reasonable and not already reimbursed.

If an expense mixes work and private use, only the work portion is deductible — and you should be able to show how you worked that out. For example, a phone used 60% for work and 40% private gives a 60% deduction on relevant phone bills. You must be able to show how you apportioned the split — for instance, a four‑week diary or itemised bill showing work calls.

Certain expenses are never deductible — for example, private living costs, fines, and most personal super contributions. Some items like car trips between home and a regular workplace are treated as private unless a specific exception applies (for example, travelling between separate jobs or carrying bulky tools).

Step‑by‑step: work out which deductions you qualify for

Use these steps to spot possible claims, work out the right amounts, and lodge them correctly.

  1. Make a complete list of possible expenses. Work‑related items commonly include clothing and laundry for uniforms and protective gear, tools and equipment, subscriptions and professional memberships, phone and internet, self‑education, travel and vehicle costs, home office expenses, union fees and income protection insurance (where premiums aren’t employer‑paid). For investments, include interest on investment loans, management fees, and rental property expenses such as interest, council rates, strata levies, insurance and repairs.
  2. Match each expense to the three ATO tests. Ask: did I pay it? Was it directly related to earning my income? Do I have a receipt or record? If the answer to any is no, don’t claim it. If yes, go to step 3.
  3. Decide the correct method for vehicle expenses. For vehicle claims you generally pick one of two methods. The cents‑per‑kilometre approach is simpler and uses a set rate per business kilometre; the logbook method requires you to record trips and running costs and uses an actual business‑use percentage based on a representative logbook period. Calculate both if unsure and pick the higher lawful claim. Note: you can't use both methods for the same car in the same year.
  4. Choose the home office method. For home‑office expenses you can either add up actual costs and apportion the work share, or use a fixed‑rate per hour method — the latter needs a record of hours you worked at home. For actual costs, keep invoices and bills. For the fixed rate, keep a record of hours worked at home.
  5. Self‑education and training. Costs directly linked to your current job — course fees, textbooks, stationary and travel to classes — can be deductible. If the course leads to a new job, it's likely not deductible. Keep receipts and evidence of how the study maintains or improves the skills you use in your current employment.
  6. Treat capital vs repair costs correctly. For rental properties and business assets, repairs to fix wear and tear are generally deductible in the year they’re incurred. Improvements or capital works are depreciated over time under the capital allowance rules. Keep detailed invoices and dates for each job.
  7. Record the amounts and keep supporting documents. Keep receipts, bank statements, invoices and contracts. For travel, note purpose, dates and kilometres. For income protection and tax agent fees, keep the policy and invoices. Retain records for five years after you lodge your tax return.
  8. Prepare your return and choose how to lodge. Use myTax via myGov to complete an individual return online, use a registered tax agent, or lodge a paper return. If you use a tax agent, you can get extra time to lodge — but you still need to supply records when asked.
  9. Be ready to explain apportionments. If you split an expense between work and private, keep the method used. For example, a four‑week diary showing that 60% of phone use was for work supports a 60% claim for billing periods that match the diary.
  10. Check limits and caps. Some claims have specific caps — for example, the concessional super contributions cap of $27,500 affects deductible personal contributions treatment. Also note the Medicare levy and tax rate brackets for estimating tax benefits.

Tips

  • Keep good habits year‑round — store receipts in a dedicated folder or use scanning apps. Digital records are acceptable if legible.
  • Use a 12‑week logbook for vehicles that shows typical business use. That percentage stands for up to five years unless your business use changes markedly.
  • When buying an item that’s partly for work (phones, laptops), record the purchase date, price and the proportion used for work — depreciate or claim immediate small‑asset deductions according to the small business rules if eligible.
  • Keep separate bank accounts or cards for work expenses if possible. It makes apportionment easier when you’re audited or questioned by the ATO.
  • Consider a registered tax agent early if your situation is complex — rental properties, capital gains, and business income can all complicate claims. Agents can also advise on timing and record keeping.

Common mistakes to avoid

  • Claiming private expenses as work costs — trips between home and your regular workplace are normally private.
  • Over‑estimating work use without records — guesses that aren’t supported by diaries, logs or bills are risky.
  • Using the wrong vehicle method — the cents‑per‑kilometre method is capped at 5,000 km per car; if you exceed that, the logbook method may be needed.
  • Mixing up repairs and capital improvements — claiming the full cost of an improvement in one year can trigger an amendment and debt.
  • Failing to keep records for five years — the ATO can ask for proof during that period.

Related Articles

Claims are straightforward if you follow the rules: list your work and investment expenses, check each against the ATO’s three tests, use the correct method for car and home office claims, and keep records for five years. Lodge via myGov/myTax or an agent, and keep your calculator handy — a few careful records now can save you time and tax later.

This article was created with AI assistance.