The Australian Taxation Office (ATO) is expected to release its Tax Time hitlist for the financial year ending 30 June 2025 in the coming days. Here’s a breakdown of what taxpayers should keep in mind when lodging their tax return. Below is a summary of the ATO’s key compliance focus areas this year.
Work-Related Expenses
The ATO has reported an estimated $8.7 billion “tax gap” — the difference between the amount of tax individuals are expected to pay and what is actually being paid. Work-related expense claims are believed to be the main contributor to this gap and are therefore a major focus for the ATO this year. Key areas under review include:
Working From Home Expenses
Taxpayers can now claim these using a fixed rate of 70 cents per hour. This method comes with stricter substantiation requirements. The ATO is expected to closely verify whether claims are backed by comprehensive records of hours worked from home throughout the year, such as timesheets, diaries, or work rosters.
Occupancy expenses
Deductions for items such as rent, rates and mortgage interest are only allowable if the home is used to run a business — not just for working from home as an employee
Mobile phone and internet costs
Particular attention will be paid to those claiming their entire bill, or a significant portion, as work-related. The ATO is also monitoring for “double dipping” — where taxpayers claim the 70 cents per hour rate (which includes an allowance for phone costs) and claim mobile expenses separately.
Other commonly scrutinised deductions:
- Work-related clothing, dry cleaning, and laundry
- Overtime meal expenses
- Union fees and professional subscriptions
- Motor vehicle expenses, especially where the 88 cents per kilometre method is used for up to 5,000 kms. The ATO is concerned some taxpayers automatically claim the 5,000 km limit regardless of actual travel.
- Deductions under the $300 threshold rule, which allows claims without receipts. The ATO has flagged misuse by those claiming up to this amount without incurring any actual expense.
Tip: Before making any claim, ensure there is a clear understanding of what can and can’t be claimed, and that all necessary records (receipts, invoices, diaries, etc.) are available to prove that the expenses were both incurred and work-related. CGH Accounting’s Tax Experts can guide you through eligible deductions, review your records, and ensure your return is accurate and ATO-compliant — maximising your refund while keeping you on the right side of the rules.
Property Spotlight
Investment properties and holiday homes are another key area of ATO scrutiny this year. Following recent audits, where errors were found in 90% of the returns reviewed, several issues are in the spotlight:
Excessive interest claims
For example, claiming interest on the family home loan as well as a rental property loan.
Incorrect income/expense apportioning
Deductions on jointly owned properties must be split appropriately between owners. Claims should not be skewed toward the higher-income owner to reduce tax liability.
Holiday homes
Claims can only be made for periods when the property was rented out or genuinely available for rent. Personal use periods cannot be claimed.
New rental property claims
Costs associated with fixing pre-existing damage or carrying out renovations after purchase are not immediately deductible and must instead be claimed over time.
Tip: Good recordkeeping is essential. This includes invoices, receipts, bank statements, and evidence that the property was genuinely available for rent (e.g. online rental listings). If a claim cannot be substantiated, it cannot be deducted. Our Tax Experts specialise in property investment taxation and can help ensure all allowable deductions are claimed correctly.
Share Economy
The ATO is convinced that many people in the sharing economy are not properly declaring their profits and gains. So, if you obtain work through Uber, Airtasker or any of the many sharing economy platforms which allow you to rent out assets or your personal services, take heed. The ATO is now receiving reports from many platforms (including Uber), which it can use to highlight data mismatches.
Similarly, if you rent out a property (or part of one) through Airbnb and Stayz, you will be under the spotlight. The ATO has numerous third-party sources of data which it can use to identify if you are receiving rent, and they are on the look-out for mismatches with the tax return data that you report.
Cryptocurrency
The ATO will also be taking a closer look at the booming market in investments in cryptocurrencies like Bitcoin. Increasing numbers of taxpayers are jumping on the bandwagon and the ATO believes that some of them are failing to declare the profits (and in some cases the losses) they are making on their investments. Remember, investing in cryptocurrencies can give rise to capital gains tax (CGT) on profits. Traders can be taxed on their profits as business income.
To help them in their search, the ATO is collecting bulk records from Australian cryptocurrency designated service providers (DSPs) as part of a data matching program to ensure people trading in cryptocurrency are paying the right amount of tax. Data provided to the ATO includes cryptocurrency purchase and sale information. The data will identify taxpayers who fail to disclose their income details correctly.
The ATO estimates that there are between 500,000 to one million Australians that have invested in crypto assets.
To summarise…
- The ATO is focusing on work-related expenses, investment property claims, sharing economy income, and cryptocurrency reporting.
- Ensure all claims are substantiated with records, understand what you can and can’t claim, and seek our expert advice if unsure.
- You can only claim rent or mortgage payment if you run a business from home—not if you’re just an employee working remotely.
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