Key ATO Focus Areas for Tax Time 2025

In the Federal Budget released earlier this year, the Australian Taxation Office (ATO) was allocated nearly $1 billion in additional funding to expand its compliance and enforcement efforts. As a result, individuals and business owners can expect a sharper focus on deductions, income reporting and proper record-keeping this tax season.

Whether you’re lodging a straightforward return or managing more complex affairs, understanding the ATO’s key focus areas for 2025 is essential to staying compliant and avoiding costly errors.

For Individuals

Work-Related Expenses

The ATO continues to monitor work-related expenses closely, especially for those claiming working-from-home deductions, car usage and mobile phone costs. Key points:

• The fixed rate method is now 70 cents per hour and includes utilities, internet, phone and stationery. You’ll need a record of all hours worked from home.
• Deductions for occupancy costs such as rent or mortgage interest are only available if you run a business from home, not if you’re an employee working remotely.
• Be cautious with the 88c/km vehicle claim and the under-$300 threshold for receipts. The ATO is actively reviewing claims made without adequate documentation.

Rental Properties

With error rates sitting above 90%, the ATO is continuing its close review of rental property deductions. Be sure to:

• Only claim deductions for the portion of the loan directly related to the investment property.
• Maintain clear records if the property was genuinely available for rent, particularly for holiday homes.
• Apportion claims correctly for co-owned properties.

Cryptocurrency

All crypto transactions, including swaps, sales and staking, need to be reported. The ATO is using third-party data from exchanges to match transactions and identify undeclared gains or losses.

If you’ve sold or traded digital assets, keep detailed records and speak with your accountant before lodging your return.

Gig & Sharing Economy Income

Platforms like Uber, Airbnb and Airtasker are now directly reporting income data to the ATO. If you’ve earned income through the sharing economy, even casually, it needs to be included in your return.

For Business Owners

Business vs Personal Spending

The ATO is targeting blurred lines between business and personal finances. Private company directors should avoid:

• Using business funds for personal expenses without documentation.
• Failing to repay director loans or treating them informally.

Keep separate accounts and ensure all transactions are clearly categorised.

Division 7A Loans

Loans between private companies and shareholders must be correctly structured and documented. To stay compliant:

• Ensure a written Division 7A loan agreement is in place.
• Make minimum yearly repayments by the deadline.
• Declare interest income appropriately in company returns.
• Failing to meet these conditions can result in the loan being treated as an unfranked dividend.

Small Business Boost Measures

If you claimed the Technology Investment Boost or Skills & Training Boost, review your eligibility. The ATO is auditing:

• Claims made for training delivered to non-employees.
• Incorrect applications of the technology deduction cap.
• Expenses that don’t qualify as eligible digital assets.

If you’re unsure, it’s best to amend before the ATO contacts you.

PAYG Instalments & Super Guarantee

The ATO is encouraging businesses to reassess their PAYG instalments to reflect current income and avoid penalties.

From 1 July 2025, the Super Guarantee increases to 12%. Ensure your payroll system is updated and contributions are made on time.

Record Keeping & Reporting

The ATO expects clear documentation for all income and expenses:

• Keep digital or physical copies of invoices and receipts.
• Maintain logs of work-related travel and business usage.
• Ensure your BAS, GST and contractor payments are reported correctly and on time.

Take Action This Tax Time

ATO scrutiny is only increasing, and this year the bar has been raised for individuals and business owners alike. Many of the areas under review are complex and the cost of getting it wrong can be high.

Whether you’re preparing your personal return or managing tax for your business, the safest option is to work with a registered tax professional.

At Carbon, our Accounting & Tax experts are across all ATO updates. We’ll help you:

• Claim the deductions you’re legally entitled to
• Avoid red flags that trigger audits
• Lodge accurate, compliant returns
• Build tax strategies that work year-round

If you’re unsure what the ATO’s 2025 focus means for you, we’re here to guide you through it.

Get in touch with our team today and make this tax time a smooth one.