The new $1,000 deduction – and its one trap
From 2026-27, employees get an automatic $1,000 deduction for work-related expenses – no receipts, no logbook. Mostly that means less admin. But there is one catch that trips people up.
From this tax year – 2026-27, the year that started on 1 July 2026 – employees get something new: an automatic $1,000 deduction for work-related expenses. It does not apply to the 2025-26 return you may be lodging now. No receipts, no logbook – it just applies. Sounds like less admin for everyone, and mostly it is. But there’s one catch that trips people up.
- Who it’s for: Australian residents earning salary and wages. It doesn’t cover dividend or business income.
- If you earn less than $1,000 in labour income, the deduction is capped at that amount.
- Union fees, professional memberships, and anything non-work-related donations, rental deductions, super contributions, income protection, the cost of managing your tax affairs – can still be claimed on top or stay unaffected either way, as long as you’ve got the records. The $1,000 itself is meant to cover everyday work costs: things like work gear, mobile phone use, and working-from-home expenses.
Here’s the trap: if your actual work-related expenses come to more than $1,000, you need records for all of them – not just the amount over $1,000. Claim $1,400 with receipts for only $300 of it, and the rest is exposed if the ATO asks.
This is exactly the kind of call BTMH makes for clients each year – take the automatic $1,000 and skip the paperwork, or claim the actual expenses because they’re genuinely higher, and keep records to back the whole claim, not just the extra.
Not sure which side of that line you’re on? Ask BTMH before you lodge.
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General information only – your circumstances may vary, talk to BTMH before relying on this.