As election day draws closer, Australia’s major parties have unveiled new tax policies aimed at easing cost-of-living pressures. Here’s what Labor and the Coalition have promised taxpayers, if they are elected.
Labor pledges $1000 automatic tax deduction
Labor has promised a new automatic $1000 tax deduction for work-related expenses. Individuals claiming this automatic deduction would not require receipts and the ATO would not conduct audits. Those wishing to claim actual expenses, with full substantiation, could choose to do so instead of receiving the flat $1000 deduction.
According to Mark Chapman of tax agency H&R Block, the deduction would apply to about six million workers who currently claim less than this amount. However, taxpayers wouldn’t see benefits until July 2027.
“The $1,000 is a deduction, not a refund,” he added. “The actual benefit depends on your tax rate.”
Reduction in bottom income tax rate
Labor is also promising a small (1 per cent) reduction in the bottom income tax rate. Small-business owners earning an income of between $18,201 and $45,000 would see savings equivalent to roughly one cup of coffee per week.
Coalition promises one-off $1200 tax offset
The Coalition has promised a one-off $1200 tax offset to be made available next financial year. The offset would apply to individuals earning up to $144,000, but the full amount would only apply to those earning between $48,000 and $104,000.
The offset would be paid as a lump sum at tax time, and taxpayers would have to lodge a return to receive it. It also ends in the 2026-27 financial year.
“It is strictly time limited, therefore in 2026-27 the offset ends…with the resulting pain of not receiving the offset looking very like a tax increase to many taxpayers,” said Chapman.
