ATO Cracks Down on “Wild” Tax Deductions
As Tax Time 2025 ramps up, the Australian Taxation Office (ATO) has revealed some “wild” deduction attempts and issued a firm reminder about what is and is not deductible. From air fryers to designer handbags, some taxpayers have pushed the limits of what qualifies as a work-related expense.
We summarise some deductions disallowed and areas the ATO will be focusing on:
“Wild” Deduction Attempts Disallowed
The ATO shared some of the most “wild” claims they’ve seen, including:
1. A mechanic who tried to claim an air fryer, microwave, two vacuum cleaners, a TV, and gaming gear as work-related expenses.
2. A truck driver who attempted to deduct swimwear because they wanted to cool off during breaks.
3. A fashion industry manager who claimed over $10,000 in luxury clothing and accessories to “look the part” at events and functions.
All of these were denied. Why? Because they were personal in nature and didn’t meet the ATO’s strict criteria for work-related deductions.
What the ATO Will Be Watching in 2025
The ATO has outlined its key focus areas this tax season:
1. Work-Related Expenses
Claims must be directly related to earning your income. You need to:
– Have spent the money yourself (and not been reimbursed).
– Prove the expense is directly related to your job.
– Keep records like receipts or invoices.
2. Working from Home Deductions
The ATO is closely monitoring these claims. You can use:
– Fixed rate method (70 cents/hour) for running costs like electricity, internet, and phone.
– Actual cost method, but you must keep detailed records.
3. Multiple Income Sources
All income must be declared—including side hustles like ride-sharing or freelance work. Each income stream may have different allowable deductions.
Tips to Stay on the Right Side of the ATO
1. Use the ATO’s myDeductions tool to keep track of expenses.
2. Avoid “double dipping”—you can’t claim the same expense twice.
3. Don’t rely on myths like claiming travel to and from work or childcare costs. These are personal expenses and not deductible.
4. When in doubt, ask a registered tax agent (like EMspire).
More information can be found on the ATO website
Need Help Navigating These Changes?
Our team specialise in helping individuals, families and business owners lodge accurate, compliant tax returns—while maximising legitimate deductions. If you’re unsure about what you can claim, or want to avoid costly mistakes, our expert team is here to help.
Contact us today to book your tax consultation and let’s make Tax Time 2025 stress-free.
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Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.