ATO's Outrageous Tax Deduction Attempts and 2025 Priorities!!
Written By:
Emelia Afful
Director
Beyond navigating compliance issues, this review offers a timely reminder to pursue legitimate tax-saving strategies actively. For many Australians, a powerful tool is making additional contributions to their superannuation.An overview of concessional contributions to superannuation, detailing how this strategy helps Australians increase their retirement savings while also reducing their current year’s taxable income.
ATO Unveils Unbelievable Tax Deduction Attempts and Priorities for 2025
The Australian Taxation Office (ATO) has recently shared some of the most bizarre and audacious tax deduction claims people have tried to pass off in the past year. Among the claims, a mechanic attempted to claim personal items like an air fryer, a microwave, two vacuum cleaners, a TV, and gaming equipment as work-related expenses — all of which were denied, as they are clearly personal in nature.
Other outlandish claims included:
- A truck driver attempting to claim swimwear as a work-related expense because of hot conditions while on the road and wanting to go for a swim. This was also denied.
- A manager in the fashion industry tried to claim over $10,000 in luxury-branded clothing and accessories, arguing it was for work events, dinners, and networking functions. However, the items were deemed too conventional for such a claim.
What Does the ATO Expect?
The ATO stresses that for an expense to be deductible, it must have a close connection to your income-earning activities and be supported by clear records such as receipts or invoices. Claims that don’t pass the ‘pub test’ are likely to be scrutinised, so it’s essential to ensure all deductions are justifiable.
Additionally, the ATO will be focusing on:
- Work-related expenses: Ensure your expenses are directly related to your job. Personal items like travel to and from work, or childcare costs, are not deductible.
- Working from home deductions: With many Australians still working from home, it’s crucial to keep records of additional expenses incurred due to working from home, like electricity, phone, and internet costs. There are two methods to claim:
- Fixed rate method: Claim 70c per hour for work-related home expenses.
- Actual cost method: Requires detailed records of the exact expenses incurred for work-related purposes.
- Fixed rate method: Claim 70c per hour for work-related home expenses.
Common Pitfalls
- Double dipping: Don’t claim the same expense more than once. If you claim a work-from-home deduction under the fixed rate method, you cannot also claim the same expenses (e.g., electricity or phone) separately elsewhere on your return.
- Side hustles: Don’t forget to declare all your income, including from side gigs like ride-sharing or selling services online. Each income stream might have different eligible deductions, so make sure to check ATO’s occupation-specific guides.
Tips for Smooth Lodgement
The ATO encourages using the myDeductions tool in the ATO app for easy record-keeping. This tool allows you to track your work and personal expenses throughout the year, so you’re ready to upload them to your tax return when the time comes.
As tax season approaches, remember: accurate records and honest claims are essential to avoid penalties and ensure your claims are in line with ATO guidelines. If you’re unsure, it’s always best to consult with a registered tax professional to guide you through the process.
Final Tip
If you’re ever in doubt about what you can claim, always check the ATO’s website or reach out to a professional. It’s better to seek guidance upfront than face penalties later!
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