Eligible workers will be able to reduce their taxable income by up to $1,000 without providing receipts for that amount. The change applies to the 2026–27 financial year, so it will first affect tax returns lodged after 30 June 2027.
The new measure does not mean that everyone will receive an extra $1,000 in their tax refund.
A tax deduction reduces the amount of income on which you pay tax. The amount it saves you will depend on your income, tax rate and other circumstances.
For example, a $1,000 deduction might reduce someone’s tax by a few hundred dollars rather than giving them a $1,000 refund.
The standard deduction generally applies to individual Australian tax residents who earn eligible income from employment, such as salary or wages.
It is important for business owners to understand that this is not a new $1,000 deduction for a business.
Companies, partnerships and trusts will continue claiming their business expenses under the existing rules. Sole traders who earn only business income will also generally continue using the existing business deduction rules.
The deduction is also limited to the amount of eligible work income earned. Someone who earns only $700 of eligible employment income during the year cannot receive the full $1,000 deduction.
No. An eligible worker does not need to prove that they spent $1,000 on work expenses to receive the standard deduction.
This is one of the main differences between the new deduction and the existing rules. Under the existing rules, workers generally need evidence of the expenses they are claiming. The standard deduction allows up to $1,000 to be deducted without providing receipts.
The standard deduction covers the types of expenses that would normally be claimed as work-related expenses, including eligible:
● tools and equipment;
● protective clothing and uniforms;
● working-from-home costs;
● work-related car and travel costs;
● phone and internet use;
● training and self-education expenses; and
● other costs directly related to earning employment income.
The existing eligibility rules still matter when someone claims their actual expenses. For example, ordinary travel between home and a regular workplace is generally considered private travel, and ordinary clothing is not normally deductible simply because it is worn to work.
Workers with more than $1,000 ineligible work-related expenses can continue claiming their actual expenses under the existing rules.
They will need to keep the receipts, invoices, travel records, diaries or other evidence required for those claims.
The standard amount is reduced by any covered work-related expenses claimed separately. This prevents the same expenses from being counted twice.
Alex works in Belmont and has $620 of eligible work-related expenses during the year.
Alex may receive a total work-related deduction of up to $1,000 without needing to provide receipts for the standard amount.
Jordan is a tradesperson working around Newcastle and Lake Macquarie. Jordan has $1,480 of eligible expenses for tools, protective equipment and work-related vehicle use.
Because Jordan has kept the required records, the $1,480 can be claimed under the existing rules. The standard component is reduced to zero because the actual covered deductions already exceed $1,000.
Some deductions sit outside the standard work-expense deduction and may still be claimed separately.
These can include:
● donations to eligible charities;
● the cost of managing your tax affairs;
● income protection, sickness or accident insurance premiums;
● union fees;
● trade or professional association membership fees; and
● eligible investment expenses.
These expenses must still qualify under the existing rules. Receipts or other records may also be required.
Yes. Keeping your records is still a good idea, particularly if your work expenses might approach or exceed $1,000.
You may not know your total until the end of the financial year. Without records, you could miss out on a larger deduction if your eligible expenses turn out to be more than $1,000.
Practical ways to stay organised include:
● photographing receipts as soon as you receive them;
● keeping work expenses in a separate email folder;
● recording what an item was used for;
● noting the work-related percentage of shared expenses such as phone and internet;
● keeping travel or vehicle records where required; and
● using the my Deductions tool in the ATO app.
Electronic copies of receipts are generally acceptable where they are clear and complete. For actual claims, tax records generally need to be kept for five years after lodging the relevant return.
The standard deduction applies from the 2026–27 income year.
It does not apply to the tax return for the year ended 30 June 2026. Eligible workers will first use it when lodging their 2026–27 returns after 30 June 2027.
The new deduction should make tax time simpler for many employees across Belmont, Newcastle, Lake Macquarie and the Hunter.
However, workers with substantial expenses should continue keeping records throughout the year. This gives their accountant or registered tax agent the information needed to correctly prepare their return and claim any deductions available under the law.
Contact Hillier’s Advisors in Belmont for assistance with individual tax returns and work-related expense records.
This article provides general information only. It does not take into account your individual circumstances and should not be treated as personal tax advice.
Since 1989 Hillier’s Advisors have been delivering financial services to individuals, businesses and business owners across Newcastle and the wider Hunter Region. A major focus for the Hillier’s Advisors team and the work we do is providing the right financial advice when our clients need it, not just when they ask for it.
