Generation Z is entering the Australian workforce in record numbers, but many are making costly tax mistakes that could be costing them hundreds or even thousands of dollars each year. If you’re an Australian resident for tax purposes for a full year, you pay no tax on the first $18,200 of your income through the tax-free threshold, yet many young workers aren’t maximising their tax benefits or understanding their deduction entitlements.
As tax professionals who’ve helped hundreds of thousands of Australians optimise their tax returns over the past 50+ years, we’ve seen how simple knowledge gaps can result in overpaid tax year after year. Generation Z (born 1995-2009) are beginning to enter the workforce and represent a significant portion of Australia’s emerging taxpayers. The key is understanding your rights as a taxpayer and taking action early in your career.
With the ATO’s increased focus on work-related deductions and digital record-keeping requirements for 2024-25, getting your tax strategy right has never been more important for young Australians building their financial futures.
Quick Summary: Gen Z Tax Essentials for 2024-25
- Tax-free threshold: You pay no tax on the first $18,200 of income if you’re an Australian resident
- Deduction threshold: If your total work-related expenses exceed $300, you must have written evidence
- Work from home rate: 70 cents per hour worked from home for 2024-25 using the fixed rate method
- Record keeping: Digital receipts and timesheets are now essential for substantial claims
- Early action: Starting good tax habits in your first job can save thousands over your career
Bottom line: Young workers who understand basic tax rules and keep proper records typically save $500-2,000 annually compared to those who don’t claim available deductions.
The Three Biggest Tax Mistakes Gen Z Workers Make
1. Dismissing ‘Casual Jobs’ as Too Small for Tax Deductions
One of the most damaging misconceptions we encounter is young workers believing their part-time, casual, or gig economy jobs don’t qualify for tax deductions. This couldn’t be further from the truth.
The reality: You can claim deductions for expenses that directly relate to earning your employment income, regardless of how much you earn or what type of work you do. Whether you’re working in hospitality, retail, content creation, delivery driving, or freelancing, there are legitimate work-related expenses you can claim.
Common claimable expenses for Gen Z workers include:
- Uniforms and protective clothing: Safety shoes for hospitality workers, branded clothing, hi-vis gear
- Technology costs: Phone bills for work calls, laptop repairs, software subscriptions
- Work from home expenses: Using the 70 cents per hour fixed rate method for 2024-25
- Training and development: First aid courses, RSA certificates, professional development
- Travel between workplaces: Transport between two separate places of employment (not home to work)
“Many young clients come to us thinking they need to earn big money before tax deductions matter,” explains senior ITP tax advisor Emma McDonald. “But we’ve helped casual workers earning $15,000 get refunds of $800-1,200 just by claiming legitimate work expenses they’d been ignoring.”
Action step: Keep receipts for any work-related purchases, no matter how small. Even a $30 uniform polo shirt or $50 safety boots can add up to meaningful deductions over the year.
2. Using Friends and Social Media as Tax Benchmarks
Gen Z are extensively connected to and shaped by their peers through social media platforms, but this digital connectivity can create dangerous tax blind spots. We regularly see young clients making decisions based on what their friends claim or what they see on social media, rather than understanding their own specific circumstances.
Why this is problematic:
- Different jobs = different deductions: Your friend’s retail job won’t have the same claimable expenses as your hospitality or office role
- Varying work arrangements: Someone working from home three days a week has different claim opportunities than someone always on-site
- Income thresholds matter: Tax benefits change significantly based on your total annual income
- Misinformation spreads: Tax myths circulate on social platforms, leading to missed opportunities or incorrect claims
“We often see groups of friends all claiming similar amounts because they’ve compared notes, but their actual work situations are completely different,” notes ITP business tax specialist Michael Whatts. “One person might legitimately claim $2,000 in work expenses while their friend in a different role might only have $200 in valid claims.”
The bigger picture: Your tax situation is as individual as your fingerprint. What your friends claim on TikTok or discuss at uni might not apply to your specific work arrangements, income level, or expenses.
Smart approach: Use our tax consultation services to understand your specific situation rather than relying on peer advice. Professional guidance typically uncovers deductions friends might miss while ensuring you stay compliant.
3. Short-Term Thinking Instead of Long-Term Tax Strategy
Generation Z expect to have 18 jobs across 6 careers, making tax planning feel overwhelming or irrelevant. Many young workers approach tax with a “one year at a time” mindset, missing opportunities for strategic financial planning that builds wealth over decades.
Short-term thinking problems:
- Missing superannuation strategies: Not understanding how super contributions can reduce current tax while building retirement wealth
- Ignoring investment education: Delaying learning about property or share investments means missing years of potential tax benefits
- Not building good systems: Poor record-keeping habits established early become expensive problems later
- Overlooking business structures: Side hustles and freelance work might benefit from business tax structures
Long-term tax strategies for Gen Z:
Build deduction habits early: Start keeping digital records now using apps or cloud storage. Good systems established in your first job will save thousands over your career.
Understand investment basics: Even small investments in shares or managed funds can provide tax benefits and learning opportunities for larger future investments.
Consider superannuation planning: Extra super contributions can reduce your current tax while building retirement wealth. 63% of Gen Z believe opportunities for advancement are extremely important, and super planning is advancing your financial future.
Plan for side businesses: Many Gen Z workers have or plan side hustles. Understanding when to register for an ABN and how business expenses work can significantly impact your tax.
“The clients who start thinking strategically about tax in their early twenties typically build significantly more wealth than those who wait until their thirties,” explains senior ITP advisor Jennifer Liu. “Small actions taken early compound dramatically over time.”
Your 2024-25 Tax Action Plan
Before June 30, 2025:
- Â Start keeping digital receipts for any work-related purchases
- Â Track work from home hours using a timesheet or app
- Â Review your pay slips to ensure correct tax is being withheld
- Â Consider making extra super contributions for tax benefits
- Â Organise records for any side business or freelance income
After July 1, 2025:
- Â Gather all tax documents (payment summaries, bank statements, receipts)
- Â Calculate work from home deductions using the ATO calculator
- Â Book a consultation to maximise your deductions
- Â Lodge your return by October 31 (or May 15 if using our services)
- Â Plan tax strategies for the following year
Year-round habits:
- Â Save receipts digitally using smartphone photos or apps
- Â Track work-related travel and expenses
- Â Monitor changes to tax law that might affect you
- Â Review your tax strategy when changing jobs or income levels
Start Building Your Tax Knowledge Now
The tax habits you build in your early career will impact your financial success for decades. Gen Z value opportunities for advancement, and smart tax planning is one of the most effective ways to advance your financial position.
Don’t let tax mistakes cost you thousands of dollars over your working life. Whether you’re earning $15,000 from a part-time job or $50,000 in your first full-time role, understanding your tax obligations and opportunities pays immediate dividends and builds crucial financial literacy.
Our experienced tax professionals have helped young Australians optimise their tax outcomes for over 50 years. We understand the unique challenges Gen Z workers face and can help you establish tax strategies that grow with your career.
Book a consultation with one of our qualified tax advisors, or visit one of our office locations across Australia to discuss your specific situation. The investment in professional tax advice typically pays for itself many times over through additional refunds and better long-term planning.
FAQs: Your Gen Z Tax Questions Answered
Can I claim work expenses if I’m under 18?
Yes, absolutely. If you earn over $18,200, you’re required to pay tax regardless of age, and you can claim legitimate work-related deductions. Many teenagers working part-time jobs can claim uniforms, safety equipment, and training costs.
Do gig economy earnings count as employment income?
This depends on your specific arrangement. If you’re an employee (like some food delivery drivers), you claim deductions as work-related expenses. If you’re running a business (like many Uber drivers or freelancers), you may need to consider business tax structures for better tax outcomes.
How much should I expect back on my first tax return?
This varies enormously based on your income, tax withheld, and legitimate deductions. First-time filers with part-time jobs often receive $300-800 refunds, while those with substantial work expenses might see $1,000-2,000 returns.
Can I claim my phone and laptop for work?
You can claim the work-related portion of tools and equipment, such as a computer, but only the percentage used for work. If you use your phone 30% for work, you can claim 30% of the costs. Keep detailed records of work vs personal usage.
What records do I need to keep for work from home claims?
You must have a record of the total number of hours you worked from home during the entire income year – timesheets, rosters, or diary entries work. Estimates aren’t acceptable for the fixed rate method.
Should I use an accountant for my simple tax return?
Even “simple” returns can benefit from professional review. Our tax return services often find additional deductions young workers miss, and we help establish good long-term tax habits that pay off for decades.
Disclaimer: This information is general in nature and does not constitute personal tax advice. Tax situations vary based on individual circumstances. For advice specific to your situation, consult with a qualified tax professional.