How much a new $1,000 tax offset would really be worth – and who’s better off avoiding it
- Written by: Fei Gao, Lecturer in Taxation, Discipline of Accounting, Governance & Regulation, The University of Sydney, University of Sydney
When Australian workers lodge a tax return from mid next year, around 6 million taxpayers look set to be able to claim up to A$1,000[1] with an “instant” work-related tax deduction, without receipts. The Albanese government has just released draft legislation[2] on the change.
That deduction is higher than the little-known $300 limit[3] on receipt-free work deductions[4] available today.
But if you’re among the majority of people who claim more than $1,000 in work expenses, you’ll be better off keeping your receipts and claiming the way you do now.
And if you have buy equipment to do your job – such as a computer, phone or tools of the trade – there’s a separate change proposed to start from July 1 this year worth knowing about too.
Does this mean a $1,000 discount on your tax bill?
No. This proposal to let Australian workers claim up to $1,000 in work deductions is not the same as getting $1,000 more back in your bank account after you submit your tax return.
The federal government estimates 6.2 million workers (42% of taxpayers) could expect to benefit from introducing a standard $1,000 work-related tax deduction in the 2026–27 financial year, without receipts to back that up. The government estimates those taxpayers would save an average of $205 in 2026–27[5].
How much you might get back would depend on how much you earn and how much you’re taxed.
For example, if you earn less than $18,200, you do not pay income tax. So this change would not benefit you.
For higher-income earners, the benefit is potentially larger. At the top tax rate[6] of 45 cents for each $1 over $190,000, a $1,000 deduction could reduce tax by up to $450 (or $470[7] including the Medicare levy).
However, while higher-income earners receive larger tax savings per dollar deducted, they’re more likely to already claim more than $1,000 in work-related expenses.
Who stands to benefit most?
Almost half (44%) of Australian workers lodge their own tax returns[8], far more than a few years ago[9].
If you’re one of them – and you’re an Australian tax resident, earning a salary here, or paying yourself a salary if you have a business – this proposed standard deduction[10] could prove useful.
If your total work-related expenses are less than $1,000[11], you could simply claim the $1,000 deduction, without receipts.
The simplicity of the new rule is likely to benefit workers with less experience lodging their own tax returns, particularly those unfamiliar with keeping receipts.
For example, around 1.7 million taxpayers under the age of 30[12] are expected to benefit, with an average saving of about $200 in 2026–27.
What’s not covered by this new offset?
It’s worth noting some other work-related deductions[13] could still be claimed from 2026–27 on top of the instant tax deduction, including:
- charitable donations
- investment expenses
- union and professional association membership fees
- income protection insurance premiums.
Who should stick to keeping receipts?
If your expenses are more than $1,000, you should continue to claim work-related deductions with receipts.
The majority of Australia’s 14.7 million workers – around 8.5 million people – aren’t expected to be affected by this change.
As of the 2022–23 tax year[14], the average Australian’s work-related expense claimed was $2,739.
The median amount was $1,338. This means most Australian taxpayers were already claiming more than this new proposed $1,000 instant deduction threshold. They’re better off continuing to claim their actual expenses.
One change that could catch people out
Putting aside the new $1,000 instant work-related deduction, this new legislation could still affect you.
Under this proposal, from 2026–27 the rules would change on “depreciation[15]” (loss in value over time) on work items such as tools or computers.
Under the current rules, if you buy an asset mainly for work use, you may be able to claim an immediate deduction if it costs $300 or less[16].
But if you have work-related items costing between $300 and $1,000, you can choose to group them together into what’s known as a “low-value pool[17]” and deduct the loss in value from your taxable income. This pool can include multiple assets valued under $1,000, purchased at different times.
For example, a laptop bought several years ago and a printer bought more recently can be grouped together, and “depreciated” as a single pool.
Under these proposed changes, from the 2026–27 financial year on, new work assets could no longer be added to a low-value pool.
Taxpayers could continue to claim depreciation on their existing pools – but any new purchases will need to be depreciated individually.
In particular, assets with longer effective life[18], such as musical instruments for work, would be written off more slowly – reducing the tax benefit you receive in the earlier years.
Overall, it’s unlikely to have a big impact on many people’s tax return, other than changing how they make future claims.
But if you do currently use the “low-value pool” for work deductions, it’s worth being aware of this proposed change now to look into it yourself, or to check with your accountant.
What does this mean for my 2025–26 tax return?
Nothing. These proposed changes are still in the consultation stage. They still have to pass through parliament to become law.
Assuming they do, these changes wouldn’t come into force until the 2026–27 tax year.
If you want to have your say on proposed instant offset or on the depreciation change, now’s your chance: public consultation on the draft legislation closes on May 1[19].
Disclaimer: This article provides general information only and is not intended as financial advice.
References
- ^ up to A$1,000 (consult.treasury.gov.au)
- ^ released draft legislation (consult.treasury.gov.au)
- ^ little-known $300 limit (www.ato.gov.au)
- ^ work deductions (www.ato.gov.au)
- ^ $205 in 2026–27 (ministers.treasury.gov.au)
- ^ At the top tax rate (www.ato.gov.au)
- ^ or $470 (ministers.treasury.gov.au)
- ^ lodge their own tax returns (www.ato.gov.au)
- ^ a few years ago (theconversation.com)
- ^ proposed standard deduction (consult.treasury.gov.au)
- ^ your total work-related expenses are less than $1,000 (storage.googleapis.com)
- ^ taxpayers under the age of 30 (ministers.treasury.gov.au)
- ^ some other work-related deductions (storage.googleapis.com)
- ^ the 2022–23 tax year (www.ato.gov.au)
- ^ depreciation (www.ato.gov.au)
- ^ costs $300 or less (www.ato.gov.au)
- ^ low-value pool (www.ato.gov.au)
- ^ assets with longer effective life (www.ato.gov.au)
- ^ closes on May 1 (consult.treasury.gov.au)
