Assessable income and allowable deductions

Your assessable income is also referred to as gross income or before tax income.

It can include inflows like wages, interest, rent, dividends, trust distributions, capital gains and business income.

Your allowable deductions are generally expenses or outgoings incurred by you in earning your assessable income. For example:

• work-related expenses, such as travel costs from work to a client’s office or the cost of education courses.
• investment property expenses, such as property management fees and electrical maintenance costs on the property.
• borrowing costs for investments for example the interest expense on a share portfolio that is financed, to some extent, with borrowed money.
• relevant business expenses for example, office rent.

Tax deductions are not available for expenses of a private, domestic or capital nature, such as the cost of childcare and building improvements.

Note: The 2026–27 Federal Budget reconfirmed the government’s commitment to introduce a standard tax deduction up to $1,000 for work-related expenses for eligible taxpayers. This measure is now law and will apply for the 2026/27 financial year. Eligible taxpayers will be able to claim an upfront deduction of up to $1,000 for eligible work-related expenses without the usual tax substantiation requirements. Taxpayers with more than $1,000 in work-related expenses, or who only earn business or investment income, retain the current substantiation arrangements.