Everyone loves a work-related deduction. From the 2026-27 income year there is a standard deduction of up to $1,000 for work-related expenses, and it applies automatically. This will simplify things for many. However, if your claims exceed $1,000 you still need to substantiate every dollar.
To be eligible for the standard deduction you must be an Australian resident and earn assessable income from salary and wages. It does not extend to dividend or business income. If your labour income for the year comes to less than $1,000, your standard deduction is capped at that amount. Union fees and memberships of a trade, business or professional association can be claimed on top, provided you keep the records. Everything else you would normally claim is unaffected, including donations, rental and investment deductions, personal super contributions, income protection premiums and the cost of managing your tax affairs.
The trap is record keeping. If your work-related expenses come to more than $1,000, you need records for all of them, not just the amount above $1,000.
Deductions fall into two camps: specific and general. Costs like membership of a professional association are deductible because the law says that specific expense is deductible. Then there are general deductions, a ‘catch-all’ for those expenses you incurred in the course of producing assessable income. With so many exceptions and qualifications, deciding what is and what isn’t deductible can require a bit of judgement.
A personal expense is not deductible just because there is a loose connection with work. In FCT v Cooper (1991), a rugby coach instructed a professional player to eat more to improve fitness for the football season. The player claimed a deduction for the cost of the additional food. He said it was deductible because the additional expense on food was incurred while producing assessable income as a professional player. Unfortunately for the player, the Court disagreed. It was held that the expense was a personal one to sustain life, so the deduction was denied.
People often want to claim clothing expenses, but unless you wear a company uniform to work it isn’t usually deductible. In Case U80 (1987), a department store staff member unsuccessfully claimed a deduction for black clothing in keeping with the retailer’s dress code. Being conventional attire, the clothing was a private expense and not deductible.
On the other hand, the personal secretary to the wife of the Governor of Queensland successfully claimed a deduction for formal daytime clothing and evening wear for her job. In this case 51 expensive garments were purchased within three months for formal work events. The deduction was allowed as the abnormal clothing expenses were due to her job and she would not otherwise wear the garments.
The lesson is, check with us before claiming a deduction on clothing.
The ATO does not mind if there is some incidental personal enjoyment from a deductible expense. Let’s say you attend an overseas eight-day work-related conference. As part of the conference you go on a winery tour and play a game of tennis. As the main purpose of attending the conference is the gaining or producing of assessable income, the total cost of the conference (airfares, accommodation and meals) is deductible. It’s OK if there is a bit of downtime. But if you want to add a personal holiday to the trip, things get tricky. You will need to apportion your airfare and claim only the portion related to the conference.
Tax deductions can be tricky. When in doubt, check with us to ensure you get it right.
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