Understanding Labor's $1,000 instant tax write-off without requiring receipts.

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Working Australians will be able to claim an instant $1,000 tax deduction to cover work expenses under a new Labor government.

Prime Minister Anthony Albanese said this will “provide more permanent cost of living relief and make tax time quicker and easier for 5.7 million taxpayers”.

The proposed reform is designed to cut down on paperwork, reduce reliance on professional tax advice, and deliver cost-of-living relief.

Who would be eligible?

To qualify for the instant deduction, taxpayers must earn an income from working. Those whose income comes solely from business or investments won’t be eligible for the $1,000, but can continue to claim deductions as usual.

Taxpayers whose work-related expenses exceed $1,000 can still itemise and claim them individually.

Albanese said everybody — including part-time workers and those working from home — will be able to claim the deduction without having to keep records or receipts.

According to Labor, more than one in three Australians currently claim under $1,000 in deductions and would benefit from the simplified process.

How will it work?

Instead of itemising individual deductions and keeping track of receipts, taxpayers could opt for the instant deduction from 2026/27.

“This will guarantee that everyone can opt for an automatic tax deduction of $1,000 on their work expenses. No paperwork, no box of receipts, no scrolling through your online banking. Just tick the box and your return’s ready to go,” Albanese said.

The government says these taxpayers would be able to complete their return in as few as six clicks, saving time and effort. However the automatic deduction will only be available for taxpayers claiming less than $1,000 with the existing process remaining in place for those who lodge higher claims.

Professor Robert Deutsch from The Tax Institute said the proposal could result in some people claiming more than they would normally be entitled to under the current system.

“There will be people who would typically receive, say, a $650 deduction, who will now be able to simply tick a box and, once this proposal is enacted, claim a $1,000 deduction,” he said.

“But there will also be others with slightly higher deductions who might still opt for the $1,000 flat rate, so there’ll be swings and roundabouts.”

Robert added that while he welcomed Labor’s initiative, it highlighted a need for a broader and modernised approach to tax time.

“The bigger concern is that I think the proposal should be expanded in time, to embrace a bigger percentage of people to enable them to get rid of the necessity to provide, keep and be able to produce receipts as a whole.”

How much could you save?

According to Labor the average amount of tax relief under the instant deduction is expected to be $205.

For those earning between $45,001 and $135,000, the benefit could be as much as $320.

“When our tax cuts to every taxpayer are fully implemented, the average full time income earner on $103,000 will receive $2,790. This will rise to up to $3,110 when combined with this reform, for those taxpayers who weren’t already claiming deductions,” Labor said in a statement.

Labor estimates the time saving alone from reducing the burden of record keeping on millions of taxpayers is estimated to be worth about $200 million a year.

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