Highlights

  • Both sit in areas the regulator says it is watching closely.
  • Car expenses and the broad "other" category together account for $24 billion, or more than three-quarters of the total.
  • They included $17,000 of baby expenses and a $20,000 gift to a family member, which was described as a "no-go zone".
  • The list also included food delivery for a virtual morning tea, and Christmas and novelty T-shirts.

ATO figures show Australians claimed $31.1 billion in work-related expenses in 2024–25, as the regulator points to unusual claims, data matching and real-time checks ahead of the 2025–26 self-lodger deadline. With the self-lodger deadline for 2025–26 tax returns only weeks away, the ATO's own figures show how large, and how varied, work-related deduction claims have become. Australians claimed $31.1 billion in work-related expenses in their 2024–25 returns, and the ATO has pointed to some claims well outside the rules, including $17,000 of baby expenses and a $20,000 gift to a family member.

Where the $31.1 billion went

Here is how the total broke down: Car: $11.9 billion, claimed by 3.9 million people Travel: $2.7 billion, 1.7 million people Clothing: $2.4 billion, 7 million people Self-education: $1.9 billion, 1.1 million people Other: $12.1 billion, 8.7 million people None of these examples fits neatly with the ATO's long-standing tests for a work-related deduction. On the 2025–26 return, the ATO's "3 golden rules" apply: the expense must relate to earning income, the taxpayer must have paid for it and not been reimbursed, and there must be records. Private and domestic costs, such as caring for a baby or giving money to relatives, fall outside those tests. Spending money does not become deductible simply because it happens during working life, or because a job is stressful or demanding.

How claims are being checked

In its tax time announcement on 27 April, the ATO named work-related deductions and omitted income as focus areas for 2026. Taken together, the figures suggest that common, high-volume claims, from clothing to rental losses, are where data matching and review activity is concentrated.

What an adjustment can cost

Hypothetical example: Sam, an office worker, includes $1,200 for everyday clothing and shoes in a 2025–26 return, believing that work attire is deductible because it is worn only at work. Because ordinary clothing is generally not deductible, a claim like this is at risk of being reduced. If the full $1,200 were disallowed and Sam's marginal rate is 30% (an assumption, ignoring the Medicare levy), the refund would fall by $360 ($1,200 × 30%). If the adjustment came after the original assessment, the return would be amended rather than corrected before the refund is issued, and further consequences could follow depending on the circumstances. The amounts in this example are illustrative only. The outcome for any real claim depends on the facts and the ATO's assessment of them.

Why receipts will matter more from 2026–27

The rules change for the income year that began on 1 July 2026. A $1,000 standard deduction for work-related expenses, enacted law, applies automatically to eligible workers from 2026–27, so it will first appear in returns lodged from July 2027. It does not apply to the 2025–26 returns being lodged now. Under the ATO's guidance, any work-related expenses claimed separately reduce the $1,000 dollar for dollar. Several existing record-keeping concessions also go from 1 July 2026: the $300 limit for claims without records, the $150 laundry limit and the award transport expense exemption.