It’s the million-dollar question we get every year – what can I claim and how can I claim it? So, let’s break it down!
Deductions reduce the amount of tax you pay. Think of it like this:
you start with what you earned (your income),
then subtract what you can claim (your deductions),
what’s left is what you pay tax on.
If you’ve paid too much tax, you’ll receive a refund. If you haven’t paid enough tax, you’ll have to pay the difference.
What can I claim?
The most common deductions we see are work-related expenses. Work-related expenses are out-of-pocket costs you incur to earn your income but aren’t reimbursed by your employer.
There are 3 golden rules to remember when claiming deductions:
you paid for it yourself (and weren't reimbursed)
it directly relates to earning your income
you have records to prove it (like a receipt).
How can I claim a deduction?
Step 1: Check if it's work related.
Ask yourself, ‘If I didn’t have this job, would I still have this expense?’ If yes, it’s probably not claimable.
Step 2: Make sure you paid for it.
You can only claim what you paid yourself. If your employer paid or reimbursed you for the expense, you can’t claim it.
Step 3: Work out the work-related amount.
If something is used for both work and personal use, you must split it and only claim the work-related portion. For example, if 10% of your phone use is for work, you can only claim 10% of the phone bill as a work-related expense.
On top of your work-related expenses, you may be able to claim a tax deduction for your working from home expenses, if you:
work from home to fulfil your work duties (not just minor tasks)
have extra costs because of it
keep records to support your claim.
If you’re eligible to claim working from home running expenses, there are 2 ways to calculate your deduction.
The fixed rate method
The fixed rate method this opens in a new window is a simple way to calculate your work from home deductions. You claim a set rate for each hour you work from home, rather than tracking individual expenses. The rate for the 2025-26 tax return is 70 cents per hour.
The rate accounts for typical running costs associated with working from home, such as:
energy costs (electricity, gas)
phone and internet usage (both home and mobile)
stationery and computer supplies (printer ink, paper, pens).
If you use this method, you can't claim these expenses anywhere else in your tax return.
However, the fixed rate doesn’t cover larger equipment purchases. You can still claim these separately, just remember:
If the item costs $300 or less, you can generally claim the full cost immediately in the year you buy them. This may include items such as keyboards, computer mouses, power boards, desk lamps and chargers.
The actual cost method allows you to claim the exact work-related portion of all your working from home expenses, rather than using a flat rate.
This can include:
a percentage of your electricity and gas bills
your phone and internet costs, based on work usage
office supplies and consumables
depreciation of equipment and furniture.
While this method can sometimes result in a larger deduction, it’s more complex. It needs:
careful calculations to determine the work-related portion of each expense
detailed records, receipts, and evidence
a clear method showing how you split work vs private use.
Because of the extra effort and documentation required, this method generally suits people who have higher running costs or dedicated home office setups.
Step 4: Keep a record.
You need proof for your claim. This is usually:
receipts or invoices
logs, diaries or calculations (for things like travel or working from home).
You don’t send these with your tax return, but you must keep them in case you’re asked later. The myDeductions this opens in a new window tool in the ATO app makes it easy to store your records and keep track of your work-related expenses (and other deductions) in one place.
Step 5: Add it to your tax return.
When you lodge your tax return:
include your expenses in the correct section (for example, work related expenses),
enter a description of the expense,
enter the total amount you’re claiming.
$1000 standard tax deduction
The proposed standard deduction for work-related expenses of up to $1,000 does not apply to your 2025-26 tax return (also known as the $1,000 instant tax deduction). This proposed change is not yet law. If passed, the standard deduction is expected to apply from the 2026-27 tax return.
