Form 2106 Australia: Claiming Employee Business Expenses in 2025

As the new financial year rolls in, Australian employees are asking: what can I really claim as a work-related expense? While the US has its Form 2106, Aussies look to the Australian Taxation Office (ATO) for guidance on what deductions are on the table. With the ATO ramping up scrutiny in 2025, it’s never been more important to understand the rules, the paperwork, and how to get the most out of your tax return.

Understanding Work-Related Expense Deductions in Australia

Unlike the US Form 2106, Australians don’t file a separate form for employee business expenses. Instead, deductions are claimed directly on your individual tax return. But the principle is the same: if you’ve spent your own money to do your job, you may be able to claim it back.

To be eligible, expenses must:

• Be directly related to earning your income

• Be paid for by you (not reimbursed by your employer)

• Be substantiated with records (receipts, logbooks, etc.)

Common examples include uniforms, tools, professional memberships, and travel for work (not commuting). In 2025, the ATO has sharpened its focus on digital recordkeeping and real-time matching, making it crucial to keep your paperwork airtight.

2025 Policy Updates: What’s New This Financial Year?

This year has brought a few key changes for employees looking to claim deductions:

• Revised Fixed Rate for Work-From-Home: The ATO’s revised fixed rate method (now 67c/hour) for home office expenses is in full effect for 2025. This covers electricity, internet, phone, and stationery—but not depreciation of furniture or equipment, which must be claimed separately.

• Updated Car Expense Logbook Rules: The 12-week logbook method remains, but the ATO now requires more frequent updates to ensure accuracy. Digital logbook apps are being encouraged.

• Stricter Substantiation: The days of ‘reasonable estimates’ are over. The ATO’s data-matching systems now flag vague or unsupported claims, especially for travel, uniforms, and self-education.

One major shift: the ATO is targeting over-claimed deductions in occupations where expenses are rare (think retail, hospitality, or junior admin roles), so don’t assume you can claim what you did last year.

How to Maximise Your Deduction (Without Getting Audited)

Smart claiming is all about knowing the rules and keeping your evidence. Here’s how to get it right in 2025:

• Keep Detailed Records: Digital receipts, bank statements, and logbooks are your best friends. The ATO’s myDeductions app can streamline this process.

• Only Claim What’s Legitimate: Ask yourself: ‘Did I spend this to earn my income? Was I reimbursed?’ If in doubt, check the ATO’s occupation-specific guides.

• Separate Personal and Work Use: For items like mobile phones or laptops, only claim the work-related portion. Keep a 4-week diary to substantiate mixed-use claims.

• Know the Tricky Areas: Travel between two workplaces is claimable—commuting from home is not. Uniforms with company logos are eligible, but generic clothing isn’t.

• Don’t Overlook Small Deductions: Union fees, subscriptions, and even COVID-19 protective gear (if required by your job) are still valid in 2025.

Real-world example: Jasmine, a Sydney-based engineer, claimed $1,200 in 2024 for tools, home office, and travel between sites. In 2025, she uses a digital logbook for her car, upgrades her home office chair (claiming depreciation), and keeps all receipts in the cloud. Her deduction is bulletproof—no stress, no audit worries.

Conclusion: Stay Ahead and Get What You Deserve

As Australian tax rules evolve, so should your approach to employee business expenses. With the ATO’s sharper focus on accuracy and digital recordkeeping in 2025, only well-documented, legitimate claims will survive scrutiny. Take the time now to review your expenses, update your systems, and make sure you’re not leaving money on the table—or risking a knock from the taxman.