Life in Australia Guide

Work-related deductions let employees subtract costs they personally incurred in earning their income from their taxable income. The Australian financial year runs from 1 July to 30 June; lodgment opens in July, and self-lodgment via myTax is due by 31 October (extensions may apply through a registered tax agent). Note that in early July your employer's income statement may not yet be finalised as 'tax ready', so the ATO recommends lodging from late July onwards. This guide is for employees — for the business expenses of ABN sole traders and gig workers, see the separate guide (gig work and ABN).

For hours worked from home, the ATO accepts two calculation methods. The fixed rate method is the simple option, applying a set amount per hour worked (70 cents per hour for 2024–25), while the actual cost method claims each item as your actual expense multiplied by your work-use percentage. Which is better depends on your circumstances, and you can only choose a method if you meet its record-keeping requirements.

The burden of substantiating your claims rests with you, the taxpayer. Supporting records such as receipts and diaries must be kept for five years after lodging, and you must be able to produce them if the ATO asks. Paper receipts fade easily, so photo or digital storage is recommended.

• Receipts, invoices, and bank statements — photograph them as soon as you spend and file them by category. The amount, date, supplier, and item must be identifiable.
• Diaries and logbooks — records of working-from-home hours, a car logbook (12 continuous weeks), and evidence of how you calculated the work-use percentage for your phone and internet.
• The ATO's official myDeductions app (free) — build up records of expenses, trips, and photos throughout the year, then upload them to myTax at lodgment time or hand them to your tax agent.

Here are the deductions employees claim most often, sorted into four groups. The three golden rules apply to every item, and for mixed private/work expenses you can only claim the work-use portion. Check what is and is not allowed for your occupation in the ATO's occupation guides.

Before you hit the lodge button, working through these five checks in order will greatly reduce the risk of amendments and reviews.

• Lodge from late July onwards — wait until your income statement shows as 'tax ready' in myGov before lodging. Lodging too early in July risks having to amend later.
• Check your occupation guide — first check what is and is not allowed in the ATO occupation guide for your job (around 40 occupations, including nursing, teaching, construction, hospitality, driving, and IT).
• Document how you calculated work-use percentages — for mixed-use expenses such as phone, internet, and car, keep a record of how you worked out the percentage.
• Exclude reimbursed expenses — costs your employer reimbursed are not your own expense and cannot be claimed.
• If it's complicated, use a registered tax agent — for borderline items, consult a TPB-registered tax agent (search the register at tpb.gov.au). Tax agent fees are deductible in the following year's return.

The ATO automatically matches data from employers, banks, investments, and platforms against your return, and deductions well above the average for your occupation and income bracket can attract a review and penalties. 'Everyone claims about this much' is not a basis for a claim — only your actual expenses and records are.

• Claiming home-to-work commuting costs — commuting is private travel and generally not deductible. Exceptions such as carrying bulky equipment are limited.
• Claiming ordinary clothes or suits — conventional clothing that is not a logoed uniform, occupation-specific clothing, or protective gear cannot be claimed, even if bought for work.
• Claiming internet or phone on top of the fixed rate — claiming items already covered by the fixed rate separately is a double claim.
• Claiming 'the average amount' without spending — amounts with no actual expense and no records are false claims, even at $300 or less.
• Reporting estimated hours or kilometres — working-from-home hours and work-related driving must be backed by actual records; without them, the deduction can be denied and penalties can apply.