Here’s what’s on their radar this year — and how you can stay compliant while still maximising your return.
What the ATO Is Watching in 2025
The ATO has made it clear they are focusing on deductions that are often over-claimed or misused. These include work-from-home expenses, car and travel claims, clothing and laundry deductions, internet and phone bills, rental property deductions, and self-education expenses.
Taxpayers who don’t keep proper records or who try to claim personal expenses as work-related are most at risk of an audit. The ATO’s work-related deductions guide outlines their position clearly.
Work From Home Deductions
Work-from-home claims remain a top priority. The fixed-rate method has been updated, and you now need detailed records such as timesheets, diaries, and bills to substantiate claims. You can no longer simply estimate your hours or percentage of use.
For a practical breakdown, see our work from home expenses guide. The ATO’s official page provides full eligibility details, and the current per-hour rate is listed on the ATO’s fixed rate method information.
Car and Travel Expenses
Car deductions are another area under heavy scrutiny. Common mistakes include claiming trips from home to the office or inflating kilometres travelled.
- Cents per kilometre method (up to 5,000 km)
- Logbook method (with a valid 12-week logbook)
Private trips, even if made in a work vehicle, are not deductible. To claim correctly, see our car logbook guide.
Clothing and Laundry Costs
Only certain types of clothing can be claimed, such as occupation-specific clothing like nurse’s scrubs, protective gear such as steel-capped boots, and employer-required uniforms with logos. General office wear, even if you only use it for work, is not deductible.
Laundry expenses must also be supported by records or reasonable calculations. The ATO’s page on clothing and laundry expenses sets out the rules in detail.
Internet, Mobile and Home Bills
Over-claiming internet and phone use is one of the most common mistakes. If your bill is shared between personal and work use, you can only claim the work-related percentage.
Keeping itemised bills and usage records is essential to justify your claim. Estimates without evidence are likely to raise red flags. Our guide to mobile and internet tax expenses explains how to calculate this correctly.
Other Red Flags in 2025
- Self-education expenses must be directly related to your current job.
- Rental property deductions: repairs are deductible, but renovations and improvements must be depreciated.
- Mixed personal and work expenses require accurate apportionment; only the work-related portion can be claimed.
How to Avoid ATO Audit Triggers
- Keep detailed records, including receipts, logbooks, diaries, and bills.
- Make realistic claims that align with your income, industry, and job role.
- Separate personal and work expenses clearly.
- Use professional help if you’re unsure.
The ATO has set out expectations in Practical Compliance Guideline 2023/1, which explains what evidence is required for work-from-home claims. For more practical advice, see our guide to common tax mistakes.
Stay On Top Of Your Tax Return
The ATO’s 2025 deduction hitlist highlights the areas where taxpayers are most likely to slip up. By keeping accurate records, understanding what you can and can’t claim, and avoiding inflated deductions, you’ll reduce your risk of an audit while still getting the best possible return.
If you want peace of mind, our team at TaxReturn.com.au can review your claims, help you avoid mistakes, and make sure your return is fully compliant.
Book your tax return today and claim with confidence.
*General Advice Warning – “Any financial advice provided by TaxReturn.com.au is general in nature and is not personal financial advice. It does not take into account your objectives, financial situation, or needs. Before acting on any information, you should consider the appropriateness of it regarding your own objectives, financial situation and needs.”
