2025 Key Tax Topics
Tax law is complicated and I can help you understand the legislation that is specific to your situation however three main rules apply to claim any deductions
1. You must have spent the money and not been reimbursed
2. The expense must relate directly to earning your income
3. You must have a record to prove it
ATO Payment Arrangements and Interest Charges
The ATO has been taking a much harder approach to collecting debts. Payment plans are becoming harder to obtain, and when they can be arranged, they are on tighter payment terms.
Legislation has been passed that means that any interest charged on ATO debts from 1 July 2025 will no longer be tax deductible. This makes payment arrangements much less attactive so it is even more important to manage your cash flow and ensure you can pay your tax liabilities on time.
Read more about ATO Interest here
Superannuation Gurarantee
The Superannuation Guarantee rate is increasing to 12% from 1 July. This is the last currently legislated increase. If you are an employer, make sure you are paying the correct amount for your employees and contractors. If you are an employee, make sure your employer pays the correct amount due to you.
Read more about Superannuation Guarantee here
Working from home (WFH) expenditure
Taxpayers can choose to either use the fixed rate method (now 70 cents per hour for the 2024/25 financial year) or the actual expense method.
Telephone, internet, electricity, consumables, and most other costs that may be incurred in relation to working from home are included in the fixed rate. If you wish to claim any of these items separately then the actual method will need to be used. The ATO will no longer accept general estimates of WFH hours. Full diary records, for the whole year, are required to claim WFH expenses. A representative record for your record keeping is not sufficient to claim a deduction.
If you want to use the ATO calcluator please have a look here: Home Office Expenses Calculator
Work Related Expenses (WRE) Nexus
The ATO has advised that they will be focusing some compliance resources on ensuring the WRE claims for individuals are valid. This includes demonstrating the direct connection of the requirement of the expense to be able to do your job, as well as ensuring the normal requirements of having spent the money and it not having been reimbursed. All receipts must clearly show the item details, amount paid and date purchased.
Rental Properties
The ATO has advised that they will again be focusing some compliance resources on Rental Properties again this year. A particular focus is on interest claims and ensuring that the interest relates to the property purchase or expenses (not just the property security for the loan). If you have any redraws or restructure of your loan please ensure that you have full details and evidence of what the redrawn or restructured funds were used for and be aware that if there are any amounts that were not used for the property (e.g. for your personal car or holiday) then we need to apportion the interest on the loan accordingly. The ATO now has even more data matching information than previously available, the last Tax Agent update advised they now have access to some insurance information and rental platform information are they are cross-checking this data with your tax return lodgements.
If you hold a rental property and haven't been claiming capital works deductions, now might be a good time to contact a quantity surveyor and obtain a tax depreciation report for your property.
Read more about rental properties here
“Same as Last Year” or “Standard Deductions”
Despite the discussion constantly recurring, there are no “Standard Deductions” in the Australian Tax Legislation and it is not acceptable to rely on prior year records to make a claim. The ATO has identified that these sort of claims contribute significantly to the tax gap and as such will be review claims. Please ensure that you have adequate means to show how your claims have been made. I will ask all taxpayers to sign a declaration that they understand and have this proof.
Personal Deductible Superannuation Contributions
The Superannuation contributions cap for 2025 is now $30,000. (Up from $27,500 in the 2024 tax year.) This means that your employer, salary sacrifice and personal contributions must (in most circumstances) be within this limit. If you have contributed more than this the ATO will impose and excess contributions charge.
If you have made a personal superannuation contribution (not including salary sacrifice) and wish to claim a tax deduction for these contributions, please contact your superannuation fund and ensure that the tax deduction notice has been completed prior to the preparation of your return. These notices need to be processed by the Superannuation Fund before your tax return is lodged. After lodgement is too late to be able to change your decision, the legislation does not allow for this.
Notice of Intent to Claim Form
Temporary full expensing (TFE)
TFE provisions will end on 30 June 2025. There is currently no indication that this will be extended. The current legislation means that the full expensing limit for small businesses for the 2026 tax year is $1,000.
Motor Vehicle Expenses
The cents per km rate has increased to 88c for the 2025 tax year. To claim for vehicle km you must have a record of the total work related km travelled. Please note that generally driving to and from your workplace is not deductible. If you have a large amount of work related use you will need full expenses records and a valid logbook.
