ATO Focus Areas for 2025 Tax Returns: What You Need to Know

As the 2025 tax season gets underway, the Australian Taxation Office (ATO) has outlined key focus areas to ensure taxpayers and small businesses are meeting their obligations. With a stronger emphasis on data matching, digital reporting, and accurate record-keeping, individuals and businesses should take note of the ATO’s priorities this year to avoid costly mistakes—or audits.

Here’s a breakdown of the ATO’s main areas of interest for Tax Time 2025:

For Individuals

 1. Work-Related Expense Claims

The ATO is closely examining deductions for work-related expenses—especially claims under the updated fixed-rate method for working from home. Taxpayers using the fixed rate method must maintain detailed logs of hours worked and evidence of running costs. Estimations or assumptions will not be accepted.

Other frequently overclaimed expenses include:

• Phone and internet usage
• Laundry and uniforms
• Motor vehicle usage
• Meals and travel

The ATO warns that misuse of the $300 no-receipt threshold remains a red flag.

2. Rental Property Deductions

Property investors are under the microscope again. According to the ATO, over 90% of rental schedules contain errors. Particular attention is being paid to:

• Incorrect apportionment of interest on loans
• Repairs vs capital improvements
• Private use of holiday rentals

The ATO is using data from rental bond agencies, banks, and short-term rental platforms to detect underreporting of rental income and ineligible claims.

3. Side Hustles and the Sharing Economy

Income from platforms like Uber, Airbnb, Airtasker, and Etsy must be declared in full. The ATO is now receiving data directly from these platforms, so undeclared side hustle income will be quickly identified.

4. Cryptocurrency Transactions

All cryptocurrency transactions must be declared. The ATO is cross-matching data with crypto exchanges both in Australia and overseas and is paying close attention to incorrect capital gains reporting or failure to disclose assets.

Why the Increased Focus?

The ATO has received close to $1 billion in additional funding to expand its compliance programs, including the Tax Avoidance Taskforce and Shadow Economy Program. This funding boost allows for more proactive data analysis, targeted audits, and increased scrutiny of high-risk taxpayers.

Digital tools and AI are also allowing the ATO to detect anomalies faster—such as unexplained wealth, mismatched data, or income not aligning with lifestyle.

How to Stay Compliant

Final Thoughts

Whether you’re an employee working from home, a landlord, a rideshare driver, or a small business owner, the ATO’s 2025 approach is clear: accuracy, transparency, and documentation are key. With enhanced powers and better data matching than ever before, it’s never been more important to get your tax return right.

If you’re unsure whether your claims are compliant or your records are sufficient, now is the time to seek professional advice.

– Heida Bell & Tim Arnold

Posted 17.07.2025

This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.