Instant tax deduction – exposure draft

We are seeking feedback on draft legislation and explanatory materials to introduce the instant tax deduction.

This reform delivers the government’s election commitment to simplify the tax system and provide cost-of-living relief.

The Bill will amend tax law to:

• introduce a standard deduction of up to $1,000 for Australian tax residents who earn income from work, starting 1 July 2026

• keep current arrangements for people who:

  • have more than $1,000 in work-related expenses, or

  • earn only business or investment income

• allow some deductions to be claimed in addition to the instant tax deduction, including:

  • investment expenses

  • charitable donations

  • union and professional association membership fees

• prevent people from receiving a double benefit by salary packaging expenses covered by the instant tax deduction

• update substantiation and capital allowance rules to support the new standard deduction.