8 tax deductions you may be able to claim at tax time
/Tax time is the moment to recover money you've already spent earning your income. If an expense was directly related to your work or income-generating activity, you paid for it yourself, and you have a record of it, there's a good chance it's deductible. Where an expense is part work and part personal (think home internet), only the work-related portion can be claimed.
Here are eight common deduction categories worth reviewing before you lodge.
1. Home office expenses
If you work from home, you may be able to claim phone and internet, stationery, computer consumables, and home office equipment such as computers, printers and furniture. You generally can't claim rent, mortgage interest, rates, or household items like tea and coffee.
Two calculation methods are available: the fixed rate method (70 cents per hour from 1 July 2025) and the actual cost method. Each has different record-keeping requirements, so pick the one that fits your situation, and remember that larger equipment purchases may need to be depreciated rather than claimed in full upfront.
2. Vehicle and travel expenses
The daily commute isn't deductible, but work travel often is, for example, driving between multiple worksites, using your car to perform your duties, or accommodation costs when you travel for work.
3. Clothing, laundry and dry-cleaning
Occupation-specific clothing, protective gear, and compulsory uniforms can be claimed, along with the cost of cleaning them. Everyday clothing and non-compulsory uniforms generally can't.
4. Self Education
If a course is directly related to your current work and meets the ATO's eligibility rules, the fees and related study costs may be deductible.
5. Industry-related deductions
The ATO publishes occupation- and industry-specific guides covering deductions unique to particular jobs, well worth checking for your field.
6. Other work-related expenses
A handful of smaller items add up: books, journals and digital subscriptions, safety equipment such as goggles or protective sunglasses, overtime meals, and union or professional association fees.
7. Gifts and donations
Donations over $2 to organisations with Deductible Gift Recipient (DGR) status are generally claimable. Not every charity qualifies, so check DGR status before claiming. Gifts have their own specific rules depending on the type.
8. Investment income
If you earn interest, dividends, rent from an investment property or other investment income, you may be able to claim related costs, for example, interest on money borrowed to invest, or fees paid for investment advice.
Single Touch Payroll and Payment Summaries
From 1 July 2019 most employers began using the ATO’s Single Touch Payroll reporting system. If your employer is one of them, it will mean that you won’t receive a payment summary for this financial year and others going forward. Never fear though, you or your tax agent will be able to access all the details needed to prepare your return via the MyGov system. As soon as your employer marks your salary as tax ready, that means your salary is final and you can use that information to complete your tax return.
COVID Impact on Home Office Deductions
For a number of families, the pandemic has meant most are working and studying from home, many for the first time. Because of this, a large number of employees are now able to claim a home office deduction in their 2020 tax return. The ATO has addressed this and made it easier for taxpayers by introducing a new shortcut method to calculate this deduction. If you worked from home between 1 March and 30 June, you are now able to claim a deduction of $0.80 per hour you worked from home. For example, if you did a 38 hour week each week for the four months you would be able to claim a deduction of $529.
This is a simplified method to use but may not necessarily mean you get the biggest tax deduction as this means you can’t claim any separate deduction for phone or internet costs or purchase of office furniture.
We recommend you consult with a tax agent to determine an appropriate calculation method to ensure the correct deduction for you.
Motor Vehicle and Travel Expenses
As an employee, you generally cannot claim any costs related to travel from home to your place of work. The only trips you can claim as travel are trips from one workplace to another, or from your workplace to a client’s premises.
Because of the pandemic, many people’s homes have become their workplace, therefore if you have started your workday at home and then had to go see a client or actually go into your place of work, you can now claim a deduction for this. If you take a taxi or an Uber ride, you are able to claim the cost of this as a travel deduction. If you drive then you can claim a motor vehicle expense either using the cents per KM method (claiming $0.68 per KM driven for work) or using the logbook method (claiming a business percentage of actual expenses).
Tax Provisions for Jobkeeper
From the 30th March, many employees and business owners have been receiving payments from the government as part of the Jobkeeper scheme. These payments do form part of your taxable income unlike the Cash Flow Boost Scheme, which is not taxable. For employees, there is nothing else you need to do to ensure you report the Jobkeeper payments received, as your employer should have already disclosed this as part of your ordinary salary and wages.
For business owners and specifically sole traders, you need to make sure the Jobkeeper payments you have received are treated as business income and therefore taxable income. You won’t have paid any tax on this income so you may find you have to pay a little bit when you come to lodge your tax return.