Car-related travel claims make up most work-related claims

Car-related travel made up the bulk of work-related expense claims.

In 2023-24, 3.6 million people claimed about $10.3 billion in car expenses.

Mr Thomson says there are two methods that people can use to make car travel claims but urges people not to "double dip" by claiming the same items.

There are two methods of claiming car expense:

• Logbook method
• Cents per kms method

There's the "logbook method", which requires taxpayers to keep a logbook for 12 weeks of the income year, which is a representative sample of their typical work pattern.

The logbook method includes a deduction of a percentage of a taxpayer's car expenses, including fuel, maintenance, and registration, unlike the "cents per kilometer" method, which only allows people to claim a set rate.

The set rate is 88 cents per kilometer for 2024-25 (in 2023-24 it was 85 cents per kilometer) and allows people to claim a maximum of 5,000 business kilometers per car, per year.

Mr Thomson says while the cents per kilometer method doesn't require written evidence to show exactly how many kilometers you travelled, the ATO may still ask people to show how they worked out their business kilometers, for example, via diary records.

"Now, that's an all-inclusive method, so that includes all your motor vehicle expenses, including rego and insurance, but what we do see is people still (incorrectly) claiming those expenses separately on the tax return," he said.

Claiming deductions for household items and personal expenses 

In previous years, some taxpayers have tried to claim household items and personal expenses as work-related expenses. In 2024-25, the ATO is cracking down on these claims. 

The ATO has specifically highlighted that claims for household items like air fryers, coffee machines, and kitchen appliances, as well as personal expenses like travel to and from work and childcare fees, fail the ‘pub test’ and don’t qualify as legitimate work expenses. 

For an expense to be deductible, it must be directly connected to earning income. It must not be private or domestic in nature. 

Work from home and home office expenses 

Taxpayers can now claim these using a fixed rate of 70 cents per hour. This method comes with stricter substantiation requirements. The ATO is expected to closely verify whether claims are backed by comprehensive records of hours worked from home throughout the year, such as timesheets, diaries, or work rosters.
Deductions for items such as rent, rates and mortgage interest are only allowable if the home is used to run a business — not just for working from home as an employee. But keep in mind that claiming occupancy expense will eventually subject to capital gain on sale of the home & cannot claim full main residence exemption.
Particular attention will be paid to those claiming their entire bill, or a significant portion, as work-related. The ATO is also monitoring for “double dipping” — where taxpayers claim the 70 cents per hour rate (which includes an allowance for phone costs) and claim mobile expenses separately.

Tip: Before making any claim, ensure there is a clear understanding of what can and can’t be claimed, and that all necessary records (receipts, invoices, diaries, etc.) are available to prove that the expenses were both incurred and work-related. North Coast Accounting Tax Experts can guide you through eligible deductions, review your records, and ensure your return is accurate and ATO-compliant — maximizing your refund while keeping you on the right side of the rules.

Areas of ongoing ATO focus 

While not specifically highlighted in the 2025 announcements, the following areas remain under close ATO scrutiny every year: 

Rental property income and deductions 

After finding errors in 90% of rental property returns in previous audits, the ATO continues to focus heavily on property investors.  

You must declare all income you receive from your rental property. This includes short-term rental arrangements, insurance payouts and rental bonds you have retained.

Areas that typically receive ATO attention include: 

• Holiday homes claiming rental status for times the property was not actually available for rent  
• Immediate claims for the ‘repair of existing defects’ in a newly purchased rental property, as opposed to ‘capital improvements/renovations’ which are claimed over several years  
• Excessive interest expense claims  
• Property owners claiming borrowing costs on their family home as well as their rental property (i.e., ‘double dipping’)  
• Incorrect percentages of rental income attributed to one party of a joint-owned property.  

If you earn rental income, you must keep all invoices, receipts and bank statements relating to your property expenses. You’ll also need proof that your property was available for rent (e.g. copies of online rental listings or advertisements) to support your claims. 

Income from the sharing economy 

If you’re among the many Australians earning an income from a sharing service like Airbnb or Uber, the ATO has data-matching programs to ensure you’re correctly declaring your income.  

Capital gains on cryptocurrency and investments 

Capital gains on cryptocurrencies and investments continue to be on the ATO’s radar, so it’s important to understand the tax implications.  If you’ve made capital gains from the sale of crypto assets, ensure that you accurately calculate and report these gains in your tax return.  

The ATO has a data matching program to identify taxpayers who fail to disclose their crypto activity correctly.    

If you buy, sell or hold other investments, such as property or shares, make sure you disclose all related activity. This includes dividend income and gains or losses made on any asset sales.  

If you buy and sell assets regularly, you may be considered a trader, which changes the taxation treatment of any gains or profits you make on your asset sales.   

If you’re unsure how to treat your investment activity in your tax return, seek professional guidance.

How North Coast Accounting can help you in your tax return

Tax rules change frequently, and everyone’s situation is different. Working with a tax professional helps ensure you claim everything you’re entitled to while complying with tax laws.  

Our personal income tax return specialists can help you prepare your tax return efficiently. 

You can reach out to us by: 

Calling us on 9306 8888

Emailing via: [email protected]