From the 2026-27 financial year, individuals can claim a flat $1,000 work-related expense deduction with no receipts or substantiation. Treasury estimates 6.2 million workers will take the deduction, with an average benefit of $205 a year. This post is the practitioner's call on when the flat $1,000 is the right move and when itemising still puts more money in your pocket.
What the new rule does
Section 900 of ITAA 1997 (the work-related deduction substantiation regime) currently requires receipts for every claim once the total goes over $300. The Budget measure overlays that with a flat-rate alternative: claim up to $1,000 without any documentation. Above $1,000 you are still on the existing rules — receipts, diaries, apportionment.
Two practical notes:
- You pick one path per return: either claim the $1,000 flat OR itemise. You cannot stack them — "I'll take the $1,000 plus also $400 for my laptop" is not how it reads.
- The flat $1,000 is a deduction, not a refund. The cash benefit is $1,000 × your marginal rate. For someone on 32.5%, that is $325; on 37%, $370. Treasury's $205 average is across the whole working population including lower brackets.
When the flat $1,000 wins
Genuine expenses under $1,000
Office worker who uses their own phone and home internet, doesn't drive for work, doesn't buy uniforms or tools, doesn't maintain professional registrations. Their honest deduction total is probably $400-$700. The flat $1,000 gives a bigger deduction with zero paperwork. This describes a meaningful slice of the PAYG population.
Compliance-cost-conscious clients
If keeping receipts is the single biggest pain in lodgement (and we hear this often), $1,000 with no records may be worth giving up a small amount of deduction for. The time saved on shoeboxing and the audit-risk reduction has value. The math is: how much extra refund does itemising deliver, vs the hours of admin + the worry of an ATO data-match query.
When itemising still wins
Anyone with substantial WFH hours
The 70¢/hour fixed-rate WFH method alone produces $896 a year for someone working from home 25 hours a week, 50 weeks a year. Add union dues, professional subscriptions, depreciation on a laptop — you blow through $1,000 fast. Itemise.
Tradies, drivers, anyone with vehicle claims
The cents-per-km method maxes out at 5,000 km × 88¢ = $4,400 (the FY26 rate). Logbook claims for tradies regularly exceed $10,000. The $1,000 flat is not even close. Itemise.
Rideshare and gig drivers
These are technically business deductions (Schedule B), not work-related expenses (Schedule D / Item D5). The $1,000 flat does not apply — ABN business deductions are unchanged. Our rideshare-driver tax post walks the difference, and sole traders looking at capital purchases should read our note on the $20,000 instant asset write-off now being permanent.
Healthcare and education workers
Mandatory professional registration, AHPRA fees, scrubs, mandatory CPD, journals, mandatory equipment, second-shift uniforms — many healthcare workers itemise well above $2,500. Same for teachers (excursion levies, classroom resources, mandatory PD). The flat $1,000 is a step backwards. See our practitioner notes on healthcare-worker deductions and teacher deductions.
What is not changing
- Self-education expenses (Item D4) — separate rules, separate cap. Not affected.
- Gifts and donations (Item D9) — separate item, not capped.
- Personal super contributions (Item D12) — separate item.
- Cost of managing tax affairs (Item D10) — including the tax-agent fee itself. Separate item.
The $1,000 flat is specifically the work-related expenses bucket (D1-D5 + miscellaneous D7). The other items above are claimable in addition.
What to do for your 2025-26 return
Nothing yet — the flat $1,000 applies from 2026-27. Your FY26 return (lodged July-October 2026) is still under existing rules. The first year the new rule applies is FY27 (1 July 2026 to 30 June 2027). Keep doing what you are doing for the current return and have the agent run the comparison on FY27 figures next year.
Sources
- Budget 2026-27 tax reform page (budget.gov.au/content/04-tax-reform.htm)
- Prime Minister media release — Tax reform for workers, businesses and future generations
- Treasurer's 2026-27 Budget speech (ministers.treasury.gov.au)