What Tax Deductions Can Australian Employees Legally Claim?

Australian employees can claim legitimate expenses directly connected to earning their employment income—but there is no universal list of items every worker can deduct.

The same purchase may be deductible for one occupation and private for another. A chef may be able to claim particular protective clothing, while an office worker generally cannot claim an ordinary black outfit simply because the employer expects professional dress.

What a tax deduction actually does

A deduction reduces your taxable income. It does not normally return the entire purchase price to you.

For example, if an eligible employee claims a $100 deduction, their tax saving is based on the marginal tax rate applying to that part of their income. It is not an automatic $100 refund.

Buying something unnecessary merely to claim it usually leaves you financially worse off. Spend money because the item is genuinely needed for work—not because somebody calls it a “tax write-off”.

Common employee deductions

Car expenses you may be able to claim

You may be able to claim car expenses when you use a car you own or lease to perform employment duties. Eligible trips can include:

• travelling directly between separate workplaces;
• travelling from the regular workplace to an alternative work location;
• visiting clients, suppliers or job sites during work;
• attending a work-related meeting away from the regular workplace; or
• performing other required employment travel.

Normal travel between home and your regular workplace is generally private and not deductible, even when:

• you work outside ordinary hours;
• public transport is unavailable;
• you are called in unexpectedly;
• you perform minor tasks during the trip;
• you live a long distance from work; or
• you carry ordinary personal items.

Limited exceptions can apply, including certain situations involving bulky tools or equipment that must be transported because there is no secure storage at work. The requirements are specific and should not be assumed merely because you carry a work bag.

Cents per kilometre method for 2025–26

For the 2025–26 income year, the ATO cents-per-kilometre rate is 88 cents per eligible work kilometre.

This method:

• applies to a car you own or lease;
• is limited to a maximum of 5,000 eligible work kilometres per car for the year;
• includes the vehicle’s running costs and decline in value; and
• requires you to show how you calculated the work kilometres.

You cannot separately add fuel, registration, insurance, servicing or depreciation for the same car when using the cents-per-kilometre method.

Logbook method

The logbook method uses the work-related percentage of actual car expenses. It may provide a larger deduction for employees with substantial eligible travel, but it requires more records.

You generally need:

• a compliant logbook covering a continuous representative period;
• odometer records;
• receipts and invoices for running costs;
• records supporting the vehicle’s purchase or lease; and
• a reasonable calculation of the work-use percentage.

A logbook can generally remain valid for several years if the usage pattern does not change materially, but odometer and expense records are still required. Check the current ATO requirements before relying on an older logbook.

Other work-related travel

You may be able to claim transport, accommodation, meals and incidental expenses when required to travel overnight for work and the trip is not private or ordinary home-to-work travel.

If a trip combines work and private purposes, only the work-related portion is potentially deductible. A short conference followed by a week-long holiday does not make the entire trip deductible.

An employer allowance does not automatically make an expense deductible. You must still meet the deduction rules and include assessable allowances where required.

Working-from-home expenses

Employees who genuinely perform employment duties from home may choose between the fixed-rate method and actual-cost method if they satisfy the requirements.

Fixed-rate method

For 2025–26, the fixed rate is 70 cents for each hour worked from home.

The rate covers the additional cost of:

• energy expenses;
• internet;
• phone usage;
• stationery; and
• computer consumables such as printer ink.

You cannot claim those covered expenses separately for the same period. You may still be able to claim the work-related decline in value of eligible equipment and furniture separately.

You must keep a record of the actual hours worked from home for the entire income year. A rough estimate based on an assumed weekly pattern is not enough.

Actual-cost method

The actual-cost method requires calculations and evidence showing the additional work-related portion of each expense.

This may include:

• electricity or gas used for heating, cooling and lighting;
• internet and phone use;
• stationery and consumables;
• cleaning of a dedicated work area where eligible; and
• decline in value of work equipment and furniture.

The method can produce a better result for some employees but generally requires considerably more detailed records.

Computers, phones and work equipment

You may be able to claim the work-related portion of a computer, monitor, phone, headset, printer, tools or other equipment required for your employment duties.

If an item is used for both work and private purposes, you must calculate a reasonable work-use percentage. Useful records can include:

• a representative usage diary;
• itemised phone records;
• work schedules;
• device-usage reports;
• receipts and invoices; and
• an explanation of how the percentage was calculated.

An eligible work item costing $300 or less may sometimes qualify for an immediate deduction. More expensive equipment is generally claimed over its effective life through decline in value rather than deducted entirely in the year of purchase.

Special rules can apply when an item forms part of a set or is substantially identical to other items purchased during the year. Do not deliberately split one purchase into smaller invoices to manufacture an immediate deduction.

Phone and internet expenses

If you use your personal phone or internet for work and are not reimbursed, you may be able to claim the work-related portion.

You need a reasonable basis for the percentage, such as a representative four-week diary showing work and private use.

Work use can include:

• calls required for employment duties;
• work-related data usage;
• email and approved workplace applications;
• videoconferences; and
• other genuine employment tasks.

Private calls, entertainment streaming, social media and general household internet usage are not work deductions.

If you use the 70-cent working-from-home fixed rate, its covered phone and internet costs cannot also be claimed separately for the same working-from-home hours.

Tools and equipment

Employees may be able to claim tools and equipment they purchase and use to earn employment income. Examples can include:

• hand tools used by tradespeople or factory workers;
• specialised measuring equipment;
• safety equipment;
• professional reference materials;
• work bags used to carry eligible equipment; and
• repairs to work-related tools.

You cannot claim:

• items supplied by the employer;
• expenses reimbursed by the employer;
• private-use portions;
• ordinary household items without a direct work connection; or
• the full cost of a depreciating asset when it must be claimed over time.

Clothing employees can claim

Clothing is generally deductible only when it falls into an eligible category.

Occupation-specific clothing

This is clothing distinctive to a particular occupation and generally unsuitable for ordinary everyday wear. The rules are narrower than many people expect.

Protective clothing

Protective clothing and footwear may be deductible when designed to protect against a real risk of illness or injury arising from work.

Examples may include:

• high-visibility clothing;
• steel-capped safety boots;
• fire-resistant clothing;
• protective gloves;
• hard hats;
• safety glasses; and
• sun-protective items for eligible outdoor workers.

Compulsory uniform

A compulsory uniform may be deductible when it identifies you as an employee of a particular organisation and is strictly enforced under a workplace policy.

Registered non-compulsory uniform

A non-compulsory uniform may be deductible if its design is registered on the relevant government register and the other requirements are met.

Clothing you generally cannot claim

Ordinary clothing remains private even when:

• your employer requires a particular colour;
• you wear it only at work;
• you would not otherwise purchase it;
• the job requires a professional appearance;
• it becomes dirty or damaged at work; or
• you change into it at the workplace.

Ordinary black trousers, white shirts, business suits, jeans and conventional shoes generally remain private clothing.

Laundry and dry-cleaning expenses

You may claim the cost of washing, drying, ironing or dry-cleaning eligible work clothing. You cannot claim cleaning costs for ordinary non-deductible clothes.

The ATO provides record-keeping concessions for laundry claims of $150 or less, but this does not create an automatic $150 deduction. You must actually incur the expense and be able to explain how it was calculated.

The $150 laundry threshold forms part of the broader $300 work-expense record concession. It is not added on top of it.

Union fees and professional subscriptions

You can generally claim:

• union fees;
• subscriptions to trade, business or professional associations connected with your current work; and
• certain bargaining-agent fees.

Use your annual statement, receipt or payslip records. Do not claim amounts paid by or reimbursed by the employer.

Initial joining fees, social-club fees and unrelated memberships may be treated differently from ongoing deductible subscriptions.

Licences, checks and certificates

Some costs of renewing a licence, accreditation or certification required for current employment may be deductible. Initial costs that allow you to begin earning income in a new occupation are often treated differently.

Examples that require careful consideration include:

• professional registration renewals;
• working-with-children checks;
• security licences;
• heavy-vehicle licence expenses;
• first-aid certificates; and
• industry accreditations.

The deduction depends on the connection with your current employment, whether the cost is initial or ongoing, and the specific ATO treatment.

Self-education and training

Self-education may be deductible when it has a sufficient connection with your current employment and:

• maintains or improves skills used in your present duties;
• provides knowledge directly relevant to those duties; or
• is likely to increase income from your current employment activities.

Eligible expenses may include:

• course fees not funded through a government loan arrangement where deductions are prohibited;
• textbooks and professional journals;
• stationery;
• equipment and depreciation;
• internet usage;
• required travel; and
• seminars or conferences related to current work.

Study is generally not deductible when it:

• relates only generally to employment;
• allows you to obtain a new job;
• qualifies you for a different occupation; or
• is primarily private.

A warehouse employee studying nursing generally cannot claim the course merely because it may improve future income. A nurse completing education directly related to current nursing duties may have a much stronger connection.

Meals and overtime meals

Ordinary meals consumed during a normal working day are private and not deductible.

An overtime meal may be deductible in limited circumstances when:

• you work overtime;
• you receive an overtime meal allowance under an industrial instrument;
• the allowance is separately shown as required; and
• you actually buy and eat the meal while working overtime.

Receiving an allowance does not create a deduction if you did not incur the expense. Reasonable-amount guidance can affect record requirements but does not create an automatic claim.

Protective equipment and sun protection

Employees exposed to genuine workplace risks may be able to claim items such as:

• safety glasses;
• hearing protection;
• protective gloves;
• helmets;
• masks and respirators;
• sunscreen;
• sunglasses;
• sun hats; and
• other task-specific protective equipment.

The work connection must be genuine. Sunscreen used by someone who works outdoors may be deductible, while sunscreen used for a weekend at the beach is private.

What employees generally cannot claim

• Normal travel between home and the regular workplace
• Ordinary clothing, even when worn only at work
• Private meals and snacks
• Childcare
• Haircuts, grooming and ordinary cosmetics
• Gym memberships unless exceptional occupation-specific requirements apply
• Fines and penalties
• Expenses paid or reimbursed by the employer
• Private phone and internet use
• Private portions of mixed-purpose purchases
• Courses used to obtain a new occupation
• Equipment supplied by the employer
• Costs incurred before employment where no sufficient income-earning connection exists

The $300 receipt myth

For the 2025–26 return, the existing written-evidence concession may apply when total work-related claims are $300 or less, subject to the rules and excluded categories.

This does not mean every employee can claim $300 without spending anything. You must still:

• have actually incurred the expense;
• satisfy the work-related connection;
• calculate the claim reasonably; and
• be able to explain it to the ATO.

If your work-related expenses exceed the relevant threshold, written evidence is generally required for the claims, subject to specific concessions.

Record keeping

Keep records showing:

• the supplier;
• the amount paid;
• the nature of the goods or services;
• the date of purchase;
• the date the document was created;
• how the expense relates to your employment;
• how any private portion was removed; and
• how rates, hours or kilometres were calculated.

Bank or credit-card statements can help prove that payment occurred, but they may not show what was purchased. Keep the invoice or receipt as well.

ATO records generally need to be retained for five years from the relevant point specified by the tax rules. Longer periods may apply to depreciating assets or other ongoing claims.

A practical deduction process

1. Start with the expense. Identify what you actually paid during the income year.
2. Confirm the employment connection. Explain how it helped you perform your current duties.
3. Remove reimbursements. Do not claim amounts repaid by your employer.
4. Separate private use. Calculate a reasonable work-related percentage.
5. Check the correct claim method. This is particularly important for cars, working from home and depreciating assets.
6. Keep the evidence. Save receipts, diaries, logbooks, rosters and calculations together.
7. Use the ATO occupation guide. Check guidance written for your industry.
8. Ask for advice when uncertain. Use the ATO or a registered tax agent rather than copying a coworker’s claim.

Common mistakes that attract trouble

• Claiming the maximum car kilometres without evidence
• Claiming normal commuting
• Estimating work-from-home hours without a full-year record
• Claiming both the fixed rate and separately claiming costs already included in it
• Claiming ordinary clothing as a uniform
• Using the $300 threshold as an automatic deduction
• Claiming equipment entirely despite substantial private use
• Claiming an employer-reimbursed expense
• Claiming a new-career course as current work education
• Failing to declare an allowance because it appears on a payslip
• Assuming another worker’s deduction automatically applies to you

Sources and further reading

• Australian Taxation Office: Claiming deductions
• Australian Taxation Office: Work-related deductions
• Australian Taxation Office: Working-from-home fixed-rate method
• Australian Taxation Office: Cents-per-kilometre method
• Australian Taxation Office: Work trips you can and cannot claim
• Australian Taxation Office: Records you need to keep
• Australian Taxation Office: Occupation and industry guides
• Australian Taxation Office: Standard deduction beginning in 2026–27