Proposed $1,000 work-related deduction
Labor's $1,000 instant tax deduction aims to simplify claiming work-related deductions
As promised in its election campaign, the Labor Government may introduce a $1,000 instant tax deduction for work-related expenses from the 2026–27 income year.
Simplifying claiming work-related deductions
The proposed measure will allow taxpayers to choose to claim a $1,000 instant tax deduction instead of claiming individual work-related expenses.
Taxpayers who choose to claim this instant deduction will not be required to collect receipts for deductions less than $1,000 in total.
Eligibility
To be eligible for the instant tax deduction:
- a taxpayer must earn labour income for example salaries and wages
- a taxpayer must not exclusively earn business or investment income.
Taxpayers who earn business or investment income may continue to claim their tax deductions in the usual way.
Other deductions
Charitable donations and other non-work related deductions would continue to be claimed on top of this instant tax deduction.
This concession will be welcomed by many workers, but it does not seem to make sense from the Government point of view. If a taxpayer has under $1,000 in deductions, he or she can choose the $1,000 deduction. If the actual deductions are more than $1,000 he or she will naturally claim the higher amount. From the ATO point of view, this seems to be a case of "Heads the taxpayer wins and tails we lose".
The concession is not peanuts. it is expected to increase tax refunds by $2.4 billion "over the forward estimates" which is code for the next three years, but as it does not start until 2026-27 tax returns, that appears to translate to $1.4 billion per year.
Perhaps we should not get to excited until we see the wording of the actual legislation.
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