Carey Group Quarterly Newsletter

ATO Cracks Down on Questionable Tax Deductions in 2025

Tax time is here, and the Australian Taxation Office (ATO) is sharpening its focus on questionable and exaggerated deductions. From luxury fashion to gaming consoles, some claims are simply too wild to pass scrutiny – and the ATO is making it clear that this year, they’re watching closely.

What’s Triggering ATO Attention?

The ATO has revealed a range of unusual and non-compliant claims that have raised red flags, including:

• A mechanic attempting to claim an air fryer, microwave, vacuum cleaners, and a gaming console as work-related expenses.
• A truck driver trying to deduct swimwear for roadside swims.
• A fashion industry manager claiming over $10,000 in luxury-branded clothing for work events.

These examples highlight a growing trend of personal expenses being disguised as work-related, and the ATO is cracking down hard.

Key Areas Under Review in 2025

The ATO’s 2025 hitlist includes:

• Work-from-home expenses: The fixed rate of 70c/hour now requires detailed records like timesheets or rosters.
• Under $300 claims: Even without receipts, claims must be legitimate and directly related to income generation.
• Mobile and internet costs: Watch out for “double-dipping” – claiming both the fixed rate and separate tech expenses.
• Motor vehicle deductions: Especially where the 5,000 km limit is claimed without proper substantiation.
• Investment property deductions: Including interest apportionment, repair costs, and holiday home availability.
• Gig economy and crypto income: Platforms like Uber, Airbnb, and crypto exchanges are now sharing data directly with the ATO.

What You Can Do

Before lodging your return, make sure:

• Your claims are genuine, work-related, and backed by clear documentation.
• You understand the difference between personal and business expenses.
• You’re not relying on outdated assumptions – like claiming travel to and from work or everyday clothing.
• You use tools like the myDeductions app to keep track of receipts and records.

When in Doubt, Ask

If your claim doesn’t pass the “pub test,” it probably won’t pass the ATO’s. For peace of mind, consult a registered tax agent or visit the ATO’s website for detailed guidance.

Don’t let a dodgy deduction derail your return. Stay informed, stay compliant, and lodge with confidence.

We can help you navigate the rules and optimise your deductions. 07 4760 5900 or email info@careygroup.com.au