Certain types of clothing are tax deductible. But you must follow the strict guidelines of the Australian Tax Office (ATO). You cannot claim the cost or upkeep of conventional clothing worn to work. What you can claim is the cost of clothing specific to your occupation, a compulsory or non-compulsory company uniform you pay for and protective clothing.

What you cannot claim

You cannot claim a tax deduction for conventional clothing you buy to wear only to work or if your employer says you have to wear certain clothing to uphold the company image.

Everyday clothing people wear to work is generally referred to as conventional clothing. For example, neat casual, business clothes or black pants and a white shirt worn by waiters or active wear that personal trainers wear. While it may seem that the cost of clothing you wear to work is a business expense, conventional clothing is a private expense as you can wear it outside the work environment.

Clothing specific to your occupation

You can claim the cost of clothes that are specific to your occupation. This can include the uniforms of health workers and a chef’s whites, checkered pants and hat, and a judge’s robe.

Compulsory work uniforms

Compulsory work uniforms and the costs to keep them clean are tax deductible. Compulsory uniforms are clothes that specifically identify you as an employee of a particular organisation. And it is compulsory to wear the uniform in accordance with company workplace policies.

In some circumstances you can also claim the cost of socks, stockings and shoes when:

·         They make up an essential part of a uniform such as a nurse’s blue uniform, non-slip shoes and stockings.

·         The type, style and colour are part of the compulsory unform and specified in the policy, for example, air hostesses.

You can also claim a single piece of clothing, such as a vest, as long as it is part of the clothing policy, is designed and made for your employer, and identifies the company with a logo permanently attached.

Claiming for non-compulsory uniforms

The only way you can claim non-compulsory uniforms is if your company registers the design on the Register of Approved Occupational Clothing. This must be the uniform you wear to work. This means that socks, shoes, stockings cannot be a part of a non-compulsory uniform. A single clothing item cannot be either unless it is overalls or a dress.

Protective clothing claims

Protective clothing is tax deductible. This includes footwear and clothing that protects you from injury or illness while at work.

Items that are tax deductible include:

·         Gloves

·         Steel capped and rubber boots

·         Hi Viz vests

·         Wet weather gear

·         Clothing that is fire resistant

·         Heavy duty pants and shirts

·         Non-slip nurse’s shoes

·         Clothing with a UPF sun protection rating

·         Aprons or smocks, or overalls or boilersuits used to protect ordinary clothing.

Laundry and repair expenses

You can claim a deduction to wash, dry clean or repair clothing that is deductible. The ATO allows you to claim $1 a load if it only contains works clothes or $0.50 a load if the load has both work and personal clothes.

If your employer pays an allowance to look after your work clothes:

·         You must include it in your taxable income on your tax return.

·         You can only claim a deduction for what you actually spent.

Keeping records

It is important to prove what you spend to buy, wash or repair work clothes. You can do this by keeping receipts or diary entries when you wash work clothes at home.

The government reduced the ability to use negative gearing in its 2026 Federal budget. This means that from 1 July 2027 you can no longer offset rental losses from residential investments against other income unless they are eligible new residential builds.
But there is some good news. If you already have residential property investments, you can still use negative gearing until you sell them. The changes do not apply to property owned at the time of the 12 May 2026 budget announcement or if you buy a house before 1 July 2027. But after that date, negative gearing no longer applies to property bought after the announcement or 1 July 2027. However, you can claim any losses from residential investments from any future capital gains when you sell them. So you need a good accounting/recordkeeping system.
How the changes work
The changes make it more complex. They create a dual system where which rules apply depend on the purchase date of a property and its type.
Rather than offsetting rental losses against your income or wages, you can only deduct losses from:
•    Rental income.
•    Capital gains when selling residential property.
If your rental losses are more than both of these, you can carry them forward.
As a result, the new negative gearing rules increase the compliance and administrative responsibilities as you must:
•    Monitor when you buy a property to determine how negative gearing applies when you sell it.
•    Keep accurate records of rental losses for applicable properties so you can offset them against future capital gains when sold.
To complicate things further, negative gearing still does apply to a new build.
What is classified as a new build?
The new rules do not apply to eligible new residential builds. You can negatively gear these properties and claim a 50% discount on the capital gains when you sell them.
Currently an eligible new build includes:
•    An apartment bought off the plan before being constructed.
•    Any residential building built on vacant land.
•    Knocking down a single house and rebuilding a duplex in its place.
•    Living in a new property for less than 12 months before it is sold for the first time.
The following property types are not eligible:
•    A property recently renovated to include extra bedrooms.
•    Replacing an older house with a new house on the same land.
•    Living in a new property for more than 12 months before selling it for the first time.
•    Building a granny flat adjacent to an established home.
If you are a property investor or want to buy an investment property, talk to Ben about how the changes will affect you. He can help you make the most out of your investment.

In the 2026 budget, the government changed the 50% Capital Gains Tax (CGT) discount. So what does that mean for you? As of 1 July 2027, the discount will be assessable based on cost base indexation with a 30% minimum CGT due on any profits when you sell any assets.

What changes

The following are the changes affecting CGT:

1.      Buying or selling an asset after 30 June 2027 means that any profit you make is subject to a minimum 30% tax.

2.      Buying and selling an asset before 1 July 2027, you still receive the 50% discount.

3.      Buying an asset before 1 July 2027 and selling it afterwards (so your ownership sits across both sides of this date) means you can get the discount based on its market value up to July 1 and, after July 1, the capital gains are based on indexation so you pay a minimum of 30% in tax on the profit.

Note: The new CGT rules are not restricted to only real estate and apply to the gains on the sale of all assets.

Assets subject to Capital Gains Tax

In general, the new CGT rules apply to the following assets (this list is not exhaustive):

·         All real estate except the family home.

·         Shares and units when you sell them or receive a distribution (as long as it is not a dividend) from a managed fund.

·         Managed investment trust distribution payments that are not assessable and are capital gains. Your trustee will let you know if a discount for CGT applies.

·         Exchange traded funds when disposed of or sold even when you receive them from a distribution reinvestment plan.

·         Crypto assets unless they are a personal asset and then may be exempt. Crypto becomes a personal asset if its primary use is for day to day purchases.

·         Personal use assets if they cost more than $10,000.

Professional valuation

The Australian Taxation Office does not require a “professional valuation” to calculate the CGT owed if the rules only require a market value. But you do need a “comparative value” and, if it is real estate, a letter from a real estate agent.

Keep in mind though that if the Commissioner questions your market value, you need to prove that the value you submitted is better than the Commissioner’s valuation.

Getting the timing right

It is important to get the timing right when selling an asset. It is better to profit from your assets in a year where your income is lower than usual. For example, in a year you have capital losses. This minimises your tax on the profit from the sale of an asset. This is important with the minimum CGT changing to a minimum of 30% in 2027, especially if you are planning to retire soon.

You also need to consider if the new CGT system will be more advantageous than the 50% discount. This is actually possible when you own the asset for many years. It also applies if the shares you own only rise a little in value with inflation. If so, then indexation may give you a better result.

The new CGT rules can make selling assets complex, which may affect your financial planning. Call us. Make an appointment to discover how to make the best of the new CGT rules.

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