What's actually happening when you analyse your expenses
There's a real methodology behind this. It's built on the same ATO guidelines tax professionals work from — we've just made them accessible without the hourly rate.
A knowledge base built from ATO guidelines
The ATO publishes the rules for what Australians can and can't claim as a tax deduction. These guidelines cover everything from working-from-home methods and vehicle expenses to occupation-specific tools, uniforms, and self-education costs. They're public, they're detailed, and they're updated every financial year.
We've structured those guidelines into a knowledge base — organised by expense category, employment type, and occupation. Each entry includes what qualifies, what evidence the ATO expects, and the relevant thresholds for FY2025–26. When the ATO updates its rules, we update the knowledge base.
Your answers activate the right rules
Not every ATO rule applies to every person. A nurse and an IT contractor have almost nothing in common when it comes to deductions. A PAYG employee and a sole trader are assessed completely differently.
When you tell us your occupation and employment type, the system filters the knowledge base down to only the guidelines relevant to you. Irrelevant rules are excluded entirely. This is what makes the analysis precise — it's not a generic checklist, it's the subset of ATO rules that actually applies to your situation.
Each expense is tested against the rules
Your expenses are passed to an AI agent alongside your filtered rule set. For every item, the agent works out which guideline applies, tests the expense against it, and returns a verdict:
- Claimable — meets the ATO criteria for your occupation and employment type
- Partial or needs review — may be claimable in part, or requires evidence you'll need to confirm
- Not claimable — doesn't meet the ATO criteria
Each verdict comes with a plain-English explanation of the reasoning and a direct link to the ATO rule it applied. Nothing is fabricated — every decision traces back to a published guideline.
What this replaces
Traditionally, getting this level of analysis meant either hiring a tax agent (who does exactly this, manually, and charges you for their time) or spending hours yourself cross-referencing ATO publications for your specific situation.
Deduct AU compresses that process to a couple of minutes and $14.90. It's not a replacement for a registered tax agent — it's a fast, informed starting point so you know where you stand before you lodge, or before you pay someone else to tell you.
Understanding your deductions
Knowing which expenses are claimable is one thing. Understanding why the rules work the way they do is another — and it's the part most people never get explained to them.
The ATO's three rules for any deduction
- You spent the money yourself and weren't reimbursed by your employer.
- It directly relates to earning your income — not living your life.
- You have a record to prove it — a receipt, invoice, or logbook entry.
All three must be true. Miss any one and the claim won't hold up.
Working from home? The ATO offers two methods for FY2025–26: the fixed rate (70c per hour worked from home) or the actual cost method. Your situation determines which applies — and that's part of what we test.
Why deductions actually save you money
Every dollar you claim as a deduction reduces your taxable income, not your tax bill directly. But those dollars pass through your marginal tax bracket on the way out — so if you're earning between $45,001 and $135,000, each $100 you claim saves you $30 in tax. That's before Medicare Levy.
| Taxable income | Tax on this income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 + 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 + 37c for each $1 over $135,000 |
| $190,001 and above | $51,638 + 45c for each $1 over $190,000 |
Resident tax rates. Non-residents have different brackets and no tax-free threshold. The 2% Medicare Levy applies to residents only. The highlighted bracket covers the majority of full-time Australian workers.
Records are what make a claim stick
The ATO doesn't audit most returns. But when they do, the question isn't whether you spent the money — it's whether you can prove it was for work. Keep records for five years from your lodgement date. A photo of a receipt on your phone counts. A bank statement alone usually doesn't.
For mixed-use items — a phone you use for both work calls and personal ones, or a laptop that doubles as a gaming machine — the ATO expects you to estimate and document the work-use percentage. Be reasonable. A 90% work claim on a shared household laptop is a red flag.
Self-education can be one of your best deductions
Courses, certifications, and professional development costs are deductible when they have a direct connection to your current job — not a future one. An IT professional getting AWS certified: yes. A teacher studying to become a nurse: no. The test is whether the course maintains or improves skills you already use in your role, or is likely to increase your income in that same role.
What you can include: course fees, textbooks, stationery, travel to the institution (but not from home to work), and a portion of your home internet if you studied online. The deduction can be substantial — and it's one the ATO explicitly encourages workers to claim correctly.
What Deduct AU doesn't do
We don't lodge your return, file anything with the ATO, or provide advice on income you haven't declared. For complex situations — multiple income streams, rental properties, business structures — a registered tax agent is the right call. Deduct AU is a fast, informed starting point, not a substitute for professional advice when the stakes are high.
Updated May 2025 · Based on current ATO guidelines
Deduct AU uses publicly available ATO guidelines under the ATO's open copyright. We are not affiliated with or endorsed by the Australian Taxation Office or the Commonwealth of Australia. This tool provides general information only and is not financial or tax advice.