Australian Tax Return Guide: Deductions You Might Be Missing

Every year, Australians leave money on the table by missing legitimate tax deductions. Whether you are an employee, contractor, or investor, understanding what you can claim is essential for minimising your tax liability. This comprehensive guide covers deductions across various categories to help ensure you are not paying more tax than you need to.

The Golden Rules of Tax Deductions

Before diving into specific deductions, it is important to understand the fundamental rules that apply to all claims. The ATO requires that expenses meet certain criteria to be deductible.

First, you must have spent the money yourself and not been reimbursed. If your employer pays for something or reimburses you, you cannot claim it. Second, the expense must be directly related to earning your income. Personal expenses are not deductible, even if they might incidentally benefit your work. Third, you must have a record to prove the expense. For claims under $300, you can use alternative records, but receipts are always preferable.

Additionally, if an expense is used for both work and personal purposes, you can only claim the work-related portion. For example, if you use your mobile phone 50% for work calls, you can claim 50% of the phone bill.

Work-Related Car Expenses

If you use your car for work purposes (not including commuting to and from your regular workplace), you may be able to claim car expenses. Work-related car travel includes travelling between different work locations, travelling from your workplace to meet clients, and attending work-related conferences or training.

You can claim car expenses using the cents per kilometre method (up to 5,000km at 85 cents per km for 2025-26) or the logbook method, which requires keeping a logbook for at least 12 weeks to establish your work-use percentage. The logbook method often results in larger claims if you drive extensively for work.

Common mistakes include claiming the normal commute to your regular workplace (this is not deductible) and not keeping adequate records. If you use the logbook method, remember to refresh your logbook if your circumstances change significantly.

Work-Related Travel Expenses

Beyond car expenses, work-related travel can include flights, accommodation, and meals when travelling for work. If your employer does not reimburse these costs, they are generally deductible.

For travel within Australia, you can claim actual expenses with receipts or use reasonable travel allowance rates published by the ATO. For overseas travel, you must keep actual records and can only claim the work-related portion of the trip. If a trip combines work and personal purposes, you need to apportion expenses accordingly.

Clothing and Laundry

You can claim the cost of buying and cleaning occupation-specific clothing, protective clothing, or compulsory uniforms. Occupation-specific clothing includes distinctive uniforms that identify you as working in a particular profession, such as a nurse's scrubs or a chef's checked pants.

Conventional clothing is not deductible, even if you only wear it for work. A suit worn to the office, even if required, is not deductible because it is not occupation-specific. However, protective clothing like steel-capped boots, high-visibility vests, or sun protection for outdoor workers is deductible.

For laundry of eligible work clothing, you can claim $1 per load if washing only work clothes, or 50 cents per load if washing mixed loads. If your total laundry claim is under $150, you do not need receipts.

Self-Education Expenses

If you undertake education that relates to your current employment, you may be able to claim tuition fees, textbooks, stationery, student union fees, and even computer equipment used for study.

The key requirement is that the education must have a sufficient connection to your current job. Courses that help you maintain or improve skills in your current role qualify, as do courses that result in a likely increase in income from your current employment. However, courses that lead to a new career are generally not deductible, as they are seen as helping you get a job rather than doing your current job better.

Home Office Expenses

With more Australians working from home, home office deductions have become increasingly relevant. You can claim a portion of household expenses that relate to your work area.

The simplified fixed rate method allows you to claim 67 cents per hour worked from home, covering energy, phone, internet, stationery, and computer consumables. Alternatively, you can calculate actual expenses for each category separately, which may result in larger claims if you have a dedicated home office.

If you have a dedicated home office, you may also be able to claim occupancy expenses like rent, mortgage interest, and council rates proportional to the floor space of your office. However, this can have capital gains tax implications if you own your home, so professional advice is recommended.

Tools and Equipment

Items used for work can be claimed as deductions. If an item costs $300 or less, you can claim an immediate deduction. For items costing more than $300, you generally claim the decline in value (depreciation) over the effective life of the asset.

Common claimable items include computers and tablets, software and apps used for work, tools of trade, professional equipment, and protective equipment. Remember to keep receipts and only claim the work-related portion if the item is also used personally.

Professional Memberships and Subscriptions

Fees paid to professional associations and unions are generally deductible if membership relates to your current employment. This includes union fees, professional body memberships, and subscriptions to trade journals or professional publications.

Technical or professional publications that relate to your current work are also deductible. This could include subscriptions to industry newsletters, professional journals, or even relevant online resources.

Phone and Internet

If you use your personal phone or internet connection for work purposes, you can claim the work-related portion. You will need to keep records showing your work usage, which could include itemised bills or a four-week representative diary.

Many people underestimate these claims or fail to claim them at all. If you regularly make work calls, access work email, or perform work tasks using your personal phone or internet, these expenses add up over the year.

Investment-Related Deductions

If you earn investment income, expenses related to earning that income are generally deductible. For shares, this includes interest on money borrowed to invest, financial advice fees (for advice on existing investments, not initial acquisition), and ongoing management fees.

For investment properties, deductible expenses include interest on the investment loan, property management fees, council rates, insurance, repairs and maintenance, and depreciation on fixtures and fittings. A quantity surveyor's depreciation schedule can identify significant depreciation claims that many property investors miss.

Commonly Overlooked Deductions

Several deductions are frequently missed by taxpayers. Income protection insurance premiums are deductible if the policy covers loss of income. Tax agent fees from the previous year can be claimed in the current year. The cost of travelling to your tax agent is also deductible.

If you earn interest income and incur bank fees on that account, the fees may be deductible. Similarly, costs associated with managing your superannuation, such as financial advice specifically about your super, can be deductible.

Conclusion

Claiming all your entitled deductions can make a significant difference to your tax refund or liability. The key is understanding what you can claim, keeping good records throughout the year, and not being afraid to claim legitimate expenses.

If you are unsure about a deduction, check the ATO website or consult a registered tax agent. It is better to ask questions than to miss out on valid claims or inadvertently claim something incorrectly. To see how deductions affect your overall tax position, try our free Australian tax calculator.