As the 2025 End of Financial Year (EOFY) approaches, the Australian Taxation Office (ATO) is set to release its annual Tax Time hitlist, outlining key focus areas for audits and compliance checks. This list serves as a reminder for taxpayers to ensure accuracy and transparency in their lodgements, particularly as the ATO sharpens its attention on common areas of error and misreporting.
Whether you’re claiming work-related expenses, declaring income from investment properties or side hustles, or trading cryptocurrency, it’s essential to know where the ATO is directing its scrutiny this year.
Let’s take a look at the ATO’s main compliance targets for Tax Time 2025 and how you can stay on the right side of the law while maximising your refund.
- Work-Related Expenses
Work-related deductions continue to be a major contributor to Australia’s $8.7 billion individual tax gap. This year, the ATO is placing significant emphasis on claims in this category to detect overstatements and unsupported deductions.
Key Focus Areas:
- Working from Home Expenses:
The fixed rate method now stands at 70 cents per hour, covering utilities, phone, and internet. However, stricter record-keeping is required — including timesheets, diaries, or rosters showing hours worked from home. - Occupancy Costs:
You can’t claim rent or mortgage interest unless your home is a genuine place of business. Simply working from home as an employee doesn’t qualify. - Phone and Internet Expenses:
Watch out for double-dipping — where taxpayers claim both the fixed rate and phone/internet costs separately. - Other Hotspots Include:
- Clothing and laundry (must be occupation-specific or protective gear)
- Overtime meals
- Union fees and subscriptions
- Motor vehicle claims using the cents-per-kilometre method (limited to 5,000 kms)
- “No-receipt” claims under $300, which are often incorrectly claimed without incurring the expense
Tip: Before claiming anything, ask: Was the expense directly related to earning my income?
- Investment Property & Holiday Home Claims
The ATO is ramping up audits on property-related deductions. With errors detected in over 90% of rental property returns recently reviewed, investors should take extra care this EOFY.
Common Mistakes Include:
- Claiming personal interest expenses (like the family home mortgage) as rental deductions
- Incorrect apportionment of income and deductions between co-owners
- Deductions for holiday homes during periods of private use or when not genuinely available for rent
- Capital works vs. repairs: Renovations after purchase or fixing existing damage must be claimed over time — not immediately
Tip: Maintain meticulous records — invoices, receipts, bank statements, and proof that the property was genuinely available for rent (e.g. online listings).
- Sharing Economy Income
Income from platforms like Uber, Airtasker, Airbnb, and Stayz is a growing ATO target. Many individuals either under-report or omit this income entirely.
What the ATO is Watching:
- Mismatch in reported income from platforms vs. tax return data
- Undeclared rental income from Airbnb or similar services
- Failure to claim GST registration if annual turnover exceeds $75,000 (for services like Uber)
Tip: If you’ve earned income through the sharing economy, declare it — even if it was just a side hustle. The ATO receives third-party data from these platforms and can easily identify discrepancies.
- Cryptocurrency Trading and Investments
Crypto continues to rise in popularity, with estimates suggesting 500,000 to 1 million Australians are active investors. The ATO is now working with Digital Service Providers (DSPs) to obtain bulk trading data.
What You Need to Know:
- Capital gains tax (CGT) applies when you sell, trade, or gift crypto
- If you’re frequently trading, the ATO may classify your activity as a business, meaning your profits are treated as business income
- Losses must be reported, but also substantiated
Tip: Keep records of every transaction, including date, amount, purpose, and exchange rates. Crypto is no longer off the radar — full disclosure is essential.
Conclusion: Stay Smart, Stay Compliant This Tax Time
With the ATO stepping up audits and data matching, now is the time to get your tax affairs in order. While it’s tempting to stretch deductions or overlook side income, doing so risks audits, penalties, and repayments.
EOFY 2024 – 2025 FAQs
Q1: Can I still use the shortcut 80 cents/hour method for working from home?
No. The 80 cents per hour shortcut was discontinued in 2022. For 2025, the ATO only accepts the revised fixed rate method of 70 cents/hour with strict recordkeeping or the actual cost method.
Q2: I didn’t earn much from Airbnb this year — do I still need to declare it?
Yes. Any income earned from renting out property, even just a room, must be declared, regardless of the amount.
Q3: Do I have to pay tax on cryptocurrency if I haven’t sold it?
No. Tax applies to realised gains, so if you haven’t sold or swapped your crypto, no CGT event has occurred. However, once you sell, swap, or use it to purchase goods, you must report the transaction.
Q4: What records should I keep for my rental property?
You should retain receipts, invoices, loan statements, agent fees, repair bills, and evidence of rental advertising. These records must be kept for at least five years after lodging your return.
Q5: Can I claim phone and internet if I work from home?
Yes, but only a proportion based on actual work use. If using the fixed rate method, those costs are already included — avoid claiming them again separately.
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