Highlights

• It was inserted as section 25-130 of the Income Tax Assessment Act 1997 by the Treasury Laws Amendment (Tax Reform No.

• Example 15 in the draft follows Richard, a chef whose employer requires him to wear a chef's uniform and protective clothing.

• Under paragraph 138 of the draft, the Commissioner will accept a laundry deduction calculated at $1 for a full load of work-related laundry and 50c for a mixed load.

• The draft also confirms that a familiar concession is gone.

A $1,000 automatic deduction sounds convenient until your boots, uniforms, training and equipment cost considerably more. The smartest tax choice is not always the simplest one, particularly when every additional claim needs evidence.

The Rules Already Locked In

It was inserted as section 25-130 of the Income Tax Assessment Act 1997 by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, and it applies from the 2026–27 income year. Tax guidance indicates it does not apply to 2025–26 returns, which self-lodgers are lodging now ahead of the 31 October deadline. The ATO's explanation of how it will administer the deduction, draft Law Companion Ruling LCR 2026/D5, is not final. The laundry method sits in an appendix labelled Compliance approach, which the ATO describes as a proposed practical administration approach. Both could change before the ruling is finalised. The distinction matters because the headline rule rarely tells the entire story. Timing, eligibility and supporting records can change the outcome for two people facing seemingly similar circumstances.

How Richard the Chef Gets to $2,800

Example 15 in the draft follows Richard, a chef whose employer requires him to wear a chef's uniform and protective clothing. The ATO treats these as deductible work-related clothing. During 2026–27, Richard washes them separately from his own clothes in 100 full loads. Using the ATO's laundry method, that comes to $100. He also incurs, and keeps records for, $2,700 of other work-related expenses covered by the standard deduction, including food-handling certification and kitchen equipment. Richard decides to claim deductions for his work-related expenses totalling $2,800, as this provides a better outcome for him than the standard deduction. A practical decision starts with the numbers, but should not end there. Compare the likely benefit with compliance costs, the chance that assumptions change and any restrictions that apply.

The $1-a-Load Laundry Method

Under paragraph 138 of the draft, the Commissioner will accept a laundry deduction calculated at $1 for a full load of work-related laundry and 50c for a mixed load of work-related and other laundry. It covers washing, drying and ironing, but not dry cleaning. To rely on it, the draft lists four conditions: the laundry must be deductible, you must use the paragraph 138 method, you must apply it on a reasonable basis for your circumstances, and you must keep the specified records. Which clothing qualifies is still governed by the existing laundry ruling, TR 98/5. This is where the administrative detail becomes financially important. A policy can create an opportunity while still leaving taxpayers responsible for checking the conditions and keeping suitable evidence.

The $150 No-Receipts Laundry Rule Goes

The draft also confirms that a familiar concession is gone. It says the standard deduction replaced the need for subsection 900-40(1) that provided an exception to substantiation requirements for laundry expenses claimed up to $150. Instead, the substantiation rules in Subdivision 900-B apply to laundry claims. One observation is useful context, not a guarantee about what happens next.

Key Dates for Itemisers

Comments on LCR 2026/D5 close on Friday 9 October 2026, and the final ruling and laundry approach may differ from the draft. The compliance approach is proposed to apply from the 2026–27 income year. Cash flow, deadlines and documentation deserve attention before any commitment.

General information only. This article is educational and does not constitute personal financial, tax or legal advice.