How it’s calculated
Status checked 3 November 2026: legislated in Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Schedule 4, registered 26 June 2026. It applies to 2026–27 and later assessments: the first ordinary full-year returns are lodged after 30 June 2027. Section 25-130 makes the top-up max(0, min(A$1,000, eligible labour income) − covered deductions). It is not A$1,000 on top of all work expenses. We compare basic resident income tax before and after the top-up using the 2026–27 bands: 0%, 15%, 30%, 37% and 45%.
Worked example
At A$80,000 income, A$80,000 eligible labour income and A$200 covered expenses, the top-up is A$800. The combined covered deduction is A$1,000 and the basic income-tax saving is A$240. If covered expenses are A$1,200, there is no top-up.
Before you use the result
Eligible labour income is defined by the Act’s PAYG withholding categories; ordinary sole-trader business profit does not automatically qualify. Union/professional memberships and specified insurance premiums sit outside the top-up reduction. Keep other allowable deductions separate. This comparison excludes LITO, Medicare, HELP, surcharges and offsets, so it is not a full refund estimate. For non-residents the top-up and additional saving are zero; the displayed taxable-income comparison is not a non-resident tax calculation. Older ATO 2025/26 guidance described the proposal; that year is not eligible.
Frequently asked questions
Is this still a proposal?
No. Schedule 4 of Act No. 49 of 2026 legislated it for 2026–27 and later assessments. It does not apply to 2025–26 returns.
Do I receive A$1,000 cash?
No. It is a deduction from taxable income. The tax saved depends on your taxable income and other tax rules.
Can I claim more than A$1,000 of actual expenses?
Eligible actual deductions can exceed A$1,000 under ordinary rules. The standard top-up then falls to zero; do not double-count it.