Tax Deductions Australia 2026: What You Can Claim and How to Prepare

The ATO regularly reviews deduction rules to keep pace with workplace trends and technology. For the 2026 financial year, several updates affect how individuals and small businesses can claim expenses:

Work-From-Home (WFH) Deductions

The way you claim expenses for working from home has changed. The shortcut method introduced during the pandemic is no longer available. Instead, there is a new fixed rate per hour for WFH expenses. This rate covers costs like electricity, internet, phone, stationery, and computer consumables. However, it does not include depreciation for office equipment, which must be calculated and claimed separately.

To claim WFH deductions, you must keep detailed records of your working hours and the expenses you incur. Digital diaries, timesheets, or similar records are now required to support your claims.

Asset Write-Offs for Small Businesses

If you run a small business, the threshold for instantly writing off assets has changed. Assets up to a certain value per item can be written off in the year they are purchased, while more expensive assets need to be depreciated over time. Make sure to check the current threshold before making large purchases.

Record-Keeping Requirements

The ATO is placing greater emphasis on accurate, contemporaneous records. This means you should keep receipts, invoices, and logs for all expenses you plan to claim. Digital record-keeping tools and apps can make this process easier and help you stay organised throughout the year.

Increased Scrutiny on Certain Deductions

Some deductions are under closer review, including work-related travel, car expenses, and clothing. The ATO is using data-matching and industry benchmarks to identify claims that stand out or appear inconsistent with your occupation or income.

Most Australians are familiar with basic work-related deductions, but there are several categories that are often overlooked. Here’s a summary of common deductions to consider:

Work-Related Expenses

• Union Fees and Professional Memberships: If you pay fees to a union or professional association related to your current job, these are generally deductible.
• Self-Education Expenses: Courses, seminars, and some travel costs for professional development may be deductible if they directly relate to your current employment and improve your skills.
• Tools and Equipment: Items costing less than a set amount can usually be claimed outright. More expensive tools and equipment must be depreciated over their effective life.
• Protective Clothing: If your job requires specific protective clothing or footwear, the cost may be deductible.

Home Office Expenses

• Running Costs: If you work from home, you can claim a fixed rate per hour for running costs, as well as separate claims for depreciation on office furniture and equipment.
• Depreciation: Items like computers, office chairs, and desks can be depreciated if they are used for work purposes.

Investment-Related Deductions

• Interest on Investment Loans: If you borrow money to invest, the interest paid may be deductible.
• Investment Management Fees: Fees paid to manage your investments can also be claimed.

Donations

• Charitable Donations: Gifts of $2 or more to registered charities are deductible if you have a receipt.

Tax Agent and Accounting Fees

• Tax Preparation Costs: Fees paid to a registered tax agent, as well as the cost of accounting software, can be claimed in the year you incur them.

Some deductions are commonly overlooked, including:

• Depreciation on home office furniture and equipment
• Work-related subscriptions and journals
• Costs of managing your tax affairs
• Certain travel expenses directly related to your work

Claiming deductions is not just about knowing what’s allowed—it’s about planning and keeping thorough records. Here are some practical steps to help you get the most from your 2026 tax return:

1. Keep Digital Records

Use digital tools or apps to store receipts and log expenses as you go. The ATO’s myDeductions tool is designed for this purpose and can help you keep everything in one place.

2. Prepay Deductible Expenses

If you expect your income to be higher this year, consider prepaying certain deductible expenses (such as insurance premiums or professional memberships) before 30 June. This can bring forward the deduction to the current financial year.

3. Review Asset Purchases

For small businesses, purchasing eligible assets under the instant write-off threshold before the end of the financial year can provide a tax benefit. Make sure the assets are installed and ready for use by 30 June.

4. Offset Capital Gains and Losses

If you have investments, review your portfolio before the end of the financial year. Realising capital losses on underperforming investments can help offset any capital gains you have made.

5. Don’t Forget Non-Cash Deductions

Depreciation on computers, office furniture, and other equipment can add up, especially if you work from home or run a side business. Keep records of purchase dates and costs to support your claims.

The ATO is using advanced data-matching and analytics to review claims more closely. Areas under particular scrutiny include:

Work-From-Home Claims

The ATO will compare your WFH claims to industry averages and may investigate claims that appear unusually high. Accurate records are essential.

Car and Travel Expenses

If you claim car expenses, you must keep a logbook and record odometer readings. Only travel directly related to your work is deductible. Mixed-purpose trips (combining work and personal travel) are being examined more closely.

Work-Related Clothing

Only specific protective or occupation-specific clothing is deductible. Everyday clothing, even if worn to work, is generally not claimable.

Australia’s workforce is changing, with more people working remotely, freelancing, or earning income from digital platforms. The government continues to review how deductions apply to digital assets, gig economy income, and new types of work arrangements. It’s important to stay informed about any changes that may affect your future tax returns.

• Start tracking your expenses early in the financial year, not just at tax time.
• Keep all receipts and records for at least five years in case the ATO requests evidence.
• If you’re unsure about a deduction, seek advice from a registered tax agent.
• For insurance-related queries, including work-related car and travel insurance, you can consult with a professional: insurance brokers.

By understanding the latest rules and keeping thorough records, you can approach your 2026 tax return with confidence and ensure you claim everything you’re entitled to.