Tax Deductions and WTF Are They? Explained Simply
Published: May 2025
If you’ve never done a tax return before, you might be thinking...
"What the hell is a tax deduction?"
Welcome to the world of adulting. But don’t worry — we’ll explain it like you're five (but with less finger painting).
What Is a Tax Deduction?
When you spend your own money on something for work, and it ticks the right ATO boxes, it becomes a work-related expense. In tax speak, that’s a tax deduction.
How Do Deductions Actually Work?
Let’s break it down:
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You earn income (like wages).
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You spend money on something related to your job (like tools, uniforms, or travel).
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You claim that amount as a deduction.
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The ATO subtracts that from your total income to calculate your taxable income.
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You pay tax on the smaller number — and that means you pay less tax overall.
Do You Get the Money Back?
Short answer: Nope. You get a portion back based on your tax rate.
Example:
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Earn $65,000? Your tax rate is 34.5%.
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Spend $1,000 on eligible work tools.
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You get $345 back in your refund.
Not bad — but definitely not a full refund.
In a Nutshell:
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Buy something for work.
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Add it as a deduction in your return.
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It lowers your taxable income.
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That lowers the tax you pay.
Deductions = Less tax, not free money.
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situation.
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