Planning on writing off an EOFY sales buy? Here's why deductions aren't freebies

As Australia approaches the end of the financial year, sales events are tempting consumers with discounts and the prospect of tax write-offs. However, the idea that purchasing work-related items during these sales equates to a freebie is a common misconception that tax experts urge individuals to reconsider.

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Taxpayers will not get $1,000 cash back from the ATO from spending $1,000 on a work-related item.

Elizabeth Morton, a senior lecturer at Curtin University and a chartered accountant, clarifies that the Australian Taxation Office (ATO) does not provide dollar-for-dollar refunds for deductions. "Taxpayers will not get $1,000 cash back from the ATO from spending $1,000 on a work-related item," she explained. The actual benefit received is directly tied to an individual's marginal tax rate.

For instance, if an individual spends $1,000 on a deductible item and falls into the 30% tax bracket, the maximum tax saving they can achieve is $300. This saving is further diminished if the item has a private use component. If an item costing $1,000 is used only 20% for work, only $200 may be deductible, resulting in a tax saving of just $60 at the 30% tax rate.

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The 'write off' [deduction] you may or may not be eligible for is only going to be as good as the tax rate you pay.

Morton advises caution and emphasizes the importance of seeking advice from a registered tax practitioner, especially when encountering promotions during tax time. "We need to be especially mindful of anything we see in our feeds at tax time and ensure we get appropriate tax advice from a registered tax practitioner," she said. The article provides a table of Australian tax rates for the 2025-26 financial year to illustrate how taxable income influences potential savings.

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We need to be especially mindful of anything we see in our feeds at tax time and ensure we get appropriate tax advice from a registered tax practitioner.