Tax time 2025: does the ATO have a target on your back this year?

A bather-buying truckie, real estate agent dental work, and people double-dipping are among dodgy tax deduction attempts the ATO has denied.

Work-related and working-from-home tax deductions are a key focus for the Australian Taxation Office this year as some of the nation’s 15 million taxpayers test the ATO’s patience with silly claims.

The ATO is also targeting people’s forgetfulness when it comes to reporting multiple income sources, such as second jobs and side-hustles including ride-sharing apps.

It says in 2024 more than 10 million people claimed a work-related deduction, including working from home claims, and it discovered, and denied, some “outrageous” claims.

One was a mechanic claiming an air fryer, TV, gaming console and other electrical items, while another was a fashion industry manager wrongly claiming more than $10,000 in luxury-branded personal clothing and accessories.

In another case, a truck driver tried claiming swimwear used to take a dip during a stop along the highway.

A tax deduction for a truckie’s bathers? That’s a no, says the ATO. Picture: Emma Brasier

ATO assistant commissioner Rob Thomson said exaggerated tax deductions would not be tolerated.

“If your deductions don’t pass the pub test, it’s highly unlikely your claim would meet the ATO’s strict criteria,” he said.

“While a lunchtime dip might clear your head for work, swimwear for a truck driver is clearly not deductible.

“Work-related expenses must have a close connection to your income-earning activities, and you should be prepared to back it up, with records like a receipt or invoice.”

Mr Thomson said the ATO also denied a taxpayer trying to claim an engagement ring as a gift expense.

“We saw a taxpayer try to claim a barber invoice, citing they had a two-day conference in Sydney and were getting some headshots done … once again personal in nature and not deductible,” he said.

“Another one was a real estate agent who tried to claim over $30,000 for their new veneers in their mouth. Maybe they were trying to distract from the fact that the third bedroom wasn’t really a third bedroom – who knows.”

The ATO has noticed people double-dipping their deductions, such as claiming a fixed hourly rate for working from home then separately claiming internet costs that are included in that fixed rate, and making similar mistakes with the motor vehicle cents per kilometre method.

“If you are going to use those methods, make sure you have had a look at the ATO website, understand what’s included in that method so you don’t double dip,” Mr Thomson said.

“You don’t double dip the chip in the French onion dip at parties. Don’t double dip on the tax return.”

Chartered accountant and Mr Taxman founder Adrian Raftery said since March 2023 taxpayers have had to keep a daily log of their working-from-home hours.

“Most self-preparers make simple mistakes purely by not knowing the tax rules that could cost them extra money in refunds,” he said.

ATO sssistant commissioner Rob Thomson. Picture: Supplied

Dr Raftery said people who deliberately broke the rules deserved to face an ATO crackdown.

“Penalties that the ATO can charge as a percentage of any tax shortfall are 75 per cent for intentional disregard of a tax law, 50 per cent for recklessness, and 25 per cent when you don’t take reasonable care or if your case is not reasonably argued,” he said. These are on top of repaying the missed tax, and the ATO also can charge interest, currently more than 11 per cent.

The ATO’s Mr Thomson said people needed to include all income including bank interest, foreign employment and money received through apps, and it was often wise to wait for the ATO to pre-fill your return after July 1.

“Last year we pre-filled about 111 million pieces of information in tax returns,” he said.

“We do have 40 industry and occupational specific guides on the website that can help people understand what they can and cannot claim specific to their job and industry.”

Originally published as Tax time 2025: does the ATO have a target on your back this year?