With the 2025 tax season fast approaching, the Australian Taxation Office (ATO) is reminding taxpayers to be careful when claiming work-related expenses. This comes after a string of claims that didn’t quite pass the “pub test.” Here are a few examples of what didn’t get through:
- A mechanic tried to claim an air fryer, microwave, two vacuum cleaners, a TV, a gaming console and gaming accessories as work-related expenses.
- A truck driver tried to deduct swimwear purchased during transit because it was hot.
- A fashion industry manager tried to claim over $10,000 in luxury-branded clothing and accessories for work events.
These claims were all deemed personal in nature and lacked a clear link to income-earning activities. The advice here: if in doubt, leave it out—or ask for professional advice first.
2025 Priorities
The ATO is focusing on areas where taxpayers often make mistakes:
- Work-related expenses: Claims must be directly related to earning income and must be supported by receipts or invoices. Even if an expense seems work-related, it’s usually not deductible if it’s private. Many common expenses don’t qualify for deductions.
- Working from home deductions: Taxpayers must prove they had additional expenses because of working from home. (See methods below.)
- Multiple income sources: All income—including side hustles and gig economy work—must be declared. Different income sources may have different allowable deductions.
Working from Home Deductions
If you work from home, there are two methods you can use to calculate your deductions:
- Fixed rate method: Claim 70 cents per hour for additional running costs like electricity, internet, and phone usage—even if you don’t have a dedicated home office. You must keep actual records of hours worked from home across the income year. A reasonable estimate isn’t enough.
- Actual cost method: Claim the actual expenses incurred, with records to prove the claims. This method might give you a bigger deduction, but the record-keeping is more detailed.
Important: You can’t double dip. For example, if you claim phone costs using the fixed rate method, you can’t also claim them separately as an additional deduction.
If you have any questions regarding the above information, please do not hesitate to contact our office to speak to one of our team.
