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How To Maximise Your Tax Refund: Claims & Offsets

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Updated for the 2026–27 financial year

According to the ATO there are three golden rules to claim a work-related deduction: you must have spent the money yourself and not been reimbursed, the expense must directly relate to earning your income, and you must have a record to prove it. Get these three things right and you put yourself in the best possible position to maximise your refund without attracting unwanted attention. Below we walk through what you can claim, what you can claim without receipts, how offsets change your refund, and worked examples at common income levels.

Key takeaway: A bigger refund usually comes from claiming everything you are genuinely entitled to and keeping good records, not from risky shortcuts. The rules below show you where the legitimate opportunities sit.

In This Article

The Three Golden Rules For Claiming A Deduction

Before claiming anything, it helps to understand the framework the ATO applies to every work-related expense. According to the ATO, there are three golden rules to claim a deduction, and an expense must satisfy all three.

  • You must have spent the money yourself and were not reimbursed. If your employer paid you back, you cannot claim it.
  • The expense must directly relate to earning your income. There must be a genuine connection between the cost and the work you do.
  • You must have a record to prove it, usually a receipt.

If an expense is partly work-related and partly private, you can only claim the work-related portion. You can read more about the three golden rules in this plain English explainer. Keep these three tests in mind as you work through every deduction below.

What You Can Claim Without Receipts

The ATO allows you to claim up to $300 in work-related expenses without providing receipts. This is a combined limit across all your work-related expenses, not $300 per item. You still need to have personally paid for the items, not been reimbursed, and the expenses must directly relate to your job. You must also be able to explain how you worked out the amount you are claiming.

From 2026-27, a $1,000 standard deduction. From the 2026-27 income year eligible taxpayers receive a standard deduction of up to $1,000 for work-related expenses, applied automatically with no receipts needed. It does not apply to the 2025-26 return you lodge this year, and union and professional association fees can still be claimed on top of it.

Important: If your total work-related expenses come to more than $300, you must provide receipts for the entire amount, not just the part over $300. So if you claim $450, you need records for the full $450.

Laundry, Small Items And Car Travel Without Receipts

A few specific categories have their own no-receipt allowances.

  • Laundry: You can claim up to $150 per year for laundering eligible work clothing without written evidence. The rate is $1 per load if the load contains only work clothing, or 50 cents per load if it is a mixed load with personal clothing.
  • Small work-related items: Items costing under $10 each, with a total across the year under $200, do not require a receipt. You still need to note what the item was, record the date and cost, and explain how it related to your job.
  • Car travel: Using the cents per kilometre method, you can claim up to 5,000 km per year without receipts. For the 2025-26 tax year the rate is 88 cents per kilometre, rising to 91 cents from 1 July 2026. You must own the car, the travel must be for work and not ordinary commuting to and from your regular office, and you need a reasonable estimate of travel such as a diary or logbook.

For a fuller breakdown of what you can claim without receipts, see this guide.

Expenses That Always Need Receipts

Some expenses always require written evidence regardless of the amount. These include:

  • Depreciation on equipment over $300, and tools and tech such as computers and cameras costing more than $300.
  • Travel expenses including flights, accommodation and meals.
  • Overtime meal claims.
  • Self-education expenses.
  • Work-related phone or internet usage over the flat rate threshold.
  • Donations, unless they are bucket donations to a DGR totalling $10 or less for the year.

Working From Home Deductions

If you work from home, you have two methods to choose from. The right choice depends on your circumstances and the records you keep.

The revised fixed rate method applies from 1 July 2022 onwards. For 2025-26 the rate is 70 cents per hour worked from home; the ATO had not published a 2026-27 rate at the time of this update. This rate covers energy expenses (electricity and gas), phone usage (mobile and home), internet, and stationery and computer consumables. You cannot claim a separate deduction for anything the rate already covers. For example, if you use your mobile phone for work both at home and out and about, you can no longer claim a separate deduction for that phone use while still using the fixed rate. To claim actual mobile or internet use, you must switch to the actual cost method for all your working from home expenses.

A helpful feature of the fixed rate method is that it does not require a dedicated home office, so you can still claim if you work from the kitchen or living room. You can also separately claim the decline in value of assets such as computers and office furniture, repairs and maintenance of those assets, and the cost of cleaning a dedicated home office.

The actual cost method lets you claim the actual work-related portion of all your running expenses. To use it you must have an area set aside as a dedicated home office. This method can produce a larger deduction, but it requires more detailed records. You can read a clear comparison of both methods in this working from home update.

One rule applies to both methods: you cannot claim a deduction for working from home expenses that your employer has already reimbursed.

Records You Need For Working From Home Claims

Under the fixed rate method you must keep a record of all the hours you worked from home for the entire income year. The ATO will not accept estimates such as a four-week representative diary. Records can take any form provided they are kept as they occur, for example timesheets, rosters, or a diary kept for the full year. You must also keep one record, such as a bill, for each expense covered by the rate that you have incurred.

Under the actual cost method you must keep all receipts, bills and similar documents showing you incurred the expenses, plus a record of hours worked from home (either actual hours or a diary kept for a representative four-week period). You also need a record of how you calculated the work-related and private portion of each expense.

The Most Overlooked Deductions For Individuals

Many Australians leave money on the table simply because they forget legitimate deductions. Here are some commonly missed ones.

  • Union fees can be claimed under D5 – Other work-related expenses on your tax return.
  • Income protection insurance premiums are deductible. Premiums for life insurance, trauma or critical illness cover are not.
  • Self-education expenses can be claimed if the study is directly related to your current job. This can include textbooks, trade journals, stationery, printing, computer usage, student union fees, and travel and accommodation when you must be away overnight. The study must be linked to your current role, not future ambitions.
  • Outdoor workers can claim sunglasses, sunscreen and hats. If sunglasses cost more than $300, they must be depreciated over their effective life rather than claimed in full in one year.
  • Home office expenses you may claim include heating and cooling, lighting, depreciation on equipment, and work-related subscriptions.
  • Laundry of uniforms, protective or occupation-specific clothing washed at home can be claimed at $1 per load if only work-related clothing, or 50 cents per load if mixed with other clothing. No receipts are required under this method, but claims must be reasonable.

If you own a rental property, commonly forgotten deductions include bank charges, gardening and lawn maintenance, pest control, security patrols, bookkeeping and secretarial services, and travel for rent collection or inspections. If you realise you forgot a deduction or included incorrect information, you can amend your tax return. You can see more frequently missed deductions in this list.

Charitable Donations And The DGR Requirement

Genuine donations to registered charities are tax-deductible (the old $2 minimum has been removed), but only if you have a receipt and only if the organisation is endorsed as a Deductible Gift Recipient (DGR). Not every charity is a DGR, so it pays to check before you assume a donation is deductible.

The ACNC registers organisations as charities, and the ATO endorses organisations as DGRs. A charity can be endorsed as a whole, or a particular fund, authority or institution it operates can be endorsed. If only a fund is endorsed, only donations to that fund are deductible. In a small number of cases an organisation has DGR status because it is specifically listed by name in tax law.

How to check DGR status: You can search ABN Lookup to check a charity’s tax concessions and DGR status, and search the ACNC Charity Register by name or ABN to confirm it is registered as a charity. More detail is available in this ACNC factsheet.

Claiming Car Expenses: Logbook Versus Cents Per Kilometre

The ATO allows two methods for claiming car expenses: the cents per kilometre method and the logbook method.

The cents per kilometre method lets you claim up to 5,000 km per year without receipts, at 88 cents per kilometre for 2025-26 (91 cents from 1 July 2026). It is simple and works well for lower mileage.

The logbook method is generally more advantageous for anyone who drives more than 5,000 kilometres for work per year or who has a higher-value vehicle. It is more work to set up, but it can produce a much larger deduction.

Worked example: Say your total car running costs for the year, including fuel, insurance, registration, servicing and depreciation, come to $9,000, and your logbook shows you used the car 60 percent for work. Under the logbook method you could claim $5,400 (60 percent of $9,000). Using cents per kilometre on the same car for 5,000 work kilometres, your claim would be $4,400 (5,000 km at the 2025-26 rate of 88 cents; $4,550 at the 2026-27 rate of 91 cents). In this case the logbook method gives the larger deduction.

How The Logbook Method Works

Under the logbook method you work out the percentage of total car use that was for work over a continuous 12-week period. That business-use percentage then applies to all your actual car running costs for the entire financial year, including fuel, insurance, registration, servicing, depreciation and loan interest.

A valid logbook must record, for every work-related trip, the date of the trip, the odometer reading at the start, the odometer reading at the end, the number of kilometres travelled, and the reason for the trip. The logbook must cover a continuous period of at least 12 weeks, record the odometer reading at the start and end of that period, and be representative of your typical work travel pattern throughout the year.

Once established, a logbook is valid for five years, provided your work travel pattern does not change significantly. You must start a new logbook if your circumstances change, such as a new job, a different role or different travel patterns, or if you start using a different vehicle. You also need to record odometer readings on 1 July and 30 June each year to calculate your annual business-use fraction and maintain the five-year validity. Both digital and handwritten logbooks are accepted by the ATO provided they contain all the required fields.

Which trips count as work-related? Travel between two separate workplaces, travel to perform work duties away from your regular workplace, travel from home to an alternative workplace when you are not travelling to your regular workplace that day, and travel carrying bulky tools or equipment that cannot be stored at the workplace generally qualify. Ordinary daily commuting from home to a fixed regular workplace does not qualify, and neither do personal errands, even in a work vehicle. The ATO may request your logbook during an audit, so keep it safe. You can review the current logbook requirements in this guide.

How Tax Offsets Affect Your Refund

It is important to understand the difference between deductions and offsets. A deduction reduces your taxable income, which then lowers the tax calculated on it. An offset reduces the actual tax you have to pay, dollar for dollar, after your tax has been worked out.

The Low Income Tax Offset (LITO) provides up to $700 for taxpayers with a taxable income under $37,500, and it is paid pro-rata for taxable incomes up to $66,667. For example, if your taxable income is $37,000 you receive the full $700, while at $65,000 you receive $25.

The LITO is a non-refundable offset. It can reduce your tax payable to $0 but will not create a refund on its own. The Seniors and Pensioners Tax Offset (SAPTO) is also non-refundable. By contrast, the Private Health Insurance offset is a refundable tax offset, which means it can be refunded even if you do not have a tax liability.

Who Is Eligible For The Low Income Tax Offset

You may be eligible for the LITO if you are an Australian resident for tax purposes, you pay tax on your taxable income, and you earn up to $66,667. The amount works as follows:

  • If you earned $37,500 or less, you receive the maximum offset of $700.
  • If you earned between $37,501 and $45,000, you receive $700 minus 5 cents for every $1 above $37,500.
  • If you earned between $45,001 and $66,667, you receive $325 minus 1.5 cents for every $1 above $45,000.

You do not need to do anything to claim the LITO except lodge your tax return. The ATO works out the amount and reduces your tax payable accordingly. You can see it on your notice of assessment under “Less non-refundable tax offsets”. Remember that the LITO can only reduce your tax payable to $0, it is not a separate payment, and any unused amount cannot be refunded. The official details are on the ATO low income tax offset page.

How Much Tax Will You Get Back

Your refund depends on how much tax was withheld from your pay during the year compared with the tax you actually owe once deductions and offsets are applied. The resident tax rates for 2025-26 are:

  • $0 to $18,200: nil.
  • $18,201 to $45,000: 16 cents for each $1 over $18,200.
  • $45,001 to $135,000: $4,288 plus 30c for each $1 over $45,000.
  • $135,001 to $190,000: $31,288 plus 37c for each $1 over $135,000.
  • $190,001 and over: $51,638 plus 45c for each $1 over $190,000.

From 1 July 2026 the 16 cent rate falls to 15 cents, so for 2026-27 the second bracket is 15 cents for each $1 over $18,200 and the flat amounts become $4,020, $31,020 and $51,370.

Worked example at $60,000: Tax on a $60,000 taxable income is $4,288 plus 30c for each dollar over $45,000. That is $4,288 plus $4,500, giving $8,788 before offsets for 2025-26 ($8,520 for 2026-27, because the lower bracket rate falls to 15 cents). This figure excludes the Medicare levy. If you then claimed $1,500 of work-related deductions, your taxable income would fall to $58,500 and your tax would reduce, while any LITO you are entitled to is applied on top. The more legitimate deductions you claim, the more of your withheld tax comes back as a refund.

Legal Ways To Reduce The Tax You Pay

Beyond claiming deductions accurately, there are several legitimate strategies that can reduce your overall tax. The right combination depends on your full financial picture, your goals and your constraints, so consider these carefully and seek advice before acting.

  • Salary sacrificing into super. Arranging with your employer to direct some of your pre-tax salary into your super fund can reduce the income that is subject to tax at your marginal rate. Contribution limits apply ($30,000 concessional cap for 2025-26, $32,500 from 1 July 2026), so it is important to stay within the caps.
  • Prepaying deductible expenses. Bringing forward a genuinely deductible expense into the current financial year can increase this year’s deductions. The expense still has to meet the three golden rules.
  • The capital gains tax discount. When you sell an asset you have held for a qualifying period, you may be entitled to a discount on the capital gain, which reduces the amount included in your taxable income. Careful timing and good records make a real difference here.

These strategies have eligibility rules and limits that change over time, so they are best applied with personalised advice rather than guesswork.

Records You Must Keep To Support Your Claims

This brings us back to the third golden rule. Even where receipts are not strictly required, you must still keep records that show how you worked out your claim. Acceptable records include bank or credit card statements, invoices, confirmation emails, diary entries, or photographs.

Good record keeping is your protection if the ATO ever asks questions. It also makes preparing your return faster and helps ensure you do not miss deductions you are entitled to. A simple habit of saving receipts and noting work-related expenses as they occur can meaningfully increase your refund over a full year.

What To Do With Your Tax Refund

Once your refund lands, putting it to good use can have a lasting effect on your finances. There is no single right answer, but some common options include:

  • Paying down debt. Reducing high-interest debt, such as a credit card balance, often gives one of the strongest returns for your money.
  • Building savings or an emergency fund. Setting aside a buffer gives you breathing room when unexpected costs arise.
  • Topping up your super. A personal contribution can help build your retirement savings, subject to the contribution caps.
  • Investing for the longer term. Putting some of the refund towards diversified investments can help your money grow over time.

The best choice depends on your goals and your overall financial situation, which is exactly where tailored advice helps.

Get Personalised Help To Maximise Your Refund

Maximising your refund is rarely about a single trick. It comes from applying the three golden rules consistently, claiming every deduction you are genuinely entitled to, choosing the right working from home and car expense methods, understanding how offsets like the LITO change your result, and keeping records that stand up to scrutiny.

Deductions, offsets and apportioning work versus private use can get complicated quickly, and the rules change from year to year. If you want to be confident you are claiming everything correctly and not leaving money on the table, speaking with an adviser who knows your situation is the natural next step. A short conversation can often surface deductions you did not know applied to you and give you peace of mind that your return is both accurate and optimised.

Artur Osadchiy

About The Author: Artur Osadchiy

Artur is a Certified Practising Accountant with over 30 years’ experience working as a trusted advisor to 600+ clients across Australia. Based in Melbourne, he started Tax Window with his wife Marina in 2009 and leads the firm’s tax and accounting team. In his free time, Artur enjoys watching the AFL (go Kangas!) and spending time with family.

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