Work-Related Tax Deductions in Depth — WFH, Car, and Occupation Guides
Work-related tax deductions for employees in Australia, explained using official ATO rules. Covers working-from-home, car, work clothing, and self-education deductions, the $300 threshold, record-keeping obligations, and common misconceptions.
What are work-related deductions?
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).
The three golden rules of deductions
You must meet all three of the ATO's rules to claim a deduction: (1) you spent the money yourself and were not reimbursed by your employer; (2) the expense is directly related to earning your income; and (3) you have a record to prove it (such as a receipt). For expenses that are partly private and partly work-related, you can only claim the work-use portion.
Working-from-home (WFH) deductions — two calculation methods
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.
Actual hours must be recorded — estimates are not accepted
Whichever method you use, you must have a record of the hours you actually worked from home (a diary, timesheets, rosters, etc.). Estimates like 'about three days a week' are not accepted — keeping records in real time throughout the year is what keeps you safe in a review.
- fixed rate method — 70 cents per hour (2024–25 rate, changes by year) already covers energy (electricity and gas), internet, phone, and stationery/consumables, so claiming any of these items separately on top is a double claim.
Record keeping — receipts, diaries, and the myDeductions app
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.
Deductions by type — the four most common groups
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.
cents per kilometre method: 91 cents per km (2026-27 rate, changes by year), capped at 5,000 km a year — no receipts required, but you need evidence of how you worked out your work-related kilometres. logbook method: work-use percentage based on a logbook kept for 12 continuous weeks. Home-to-work commuting is generally not deductible (limited exceptions such as carrying bulky equipment); travel between workplaces or between work locations can be claimed.
Only compulsory uniforms with a company logo, occupation-specific clothing, and protective gear (safety boots, hi-vis, gloves, etc.) are deductible — ordinary clothes and suits are not, even under a dress code. Laundry for deductible clothing is claimed at the ATO's set rates ($1 per load when washing work clothing only, 50 cents per load when mixed with other clothes).
Work tools and equipment under $300 are deducted immediately; anything above that is depreciated over several years (decline in value). Self-education is deductible only when directly related to your current job — courses aimed at switching to a new occupation are not deductible.
Five-step pre-lodgment checklist
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).
Common mistakes and ATO review triggers
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.
Useful official links
- ATO — Deductions you can claim(opens in a new window)
ATO deductions overview — official guidance on the full range of deductions employees can claim and the three golden rules.
- ATO — Working from home expenses(opens in a new window)
Official guidance on working-from-home expenses — how the fixed rate and actual cost methods work, record-keeping requirements for hours worked, and each year's rates.
- (opens in a new window)