As tax time approaches, the Australian Taxation Office (ATO) is once again reminding taxpayers to be cautious and accurate when claiming work-related expenses. Recent examples released by the ATO highlight some of the more questionable deductions attempted last year – ranging from air fryers to luxury fashion items.

Among the more unusual claims:

• A mechanic attempted to deduct an air fryer, microwave, two vacuum cleaners, a TV, and gaming equipment – all denied as personal expenses.
• A truck driver tried to claim swimwear, citing hot weather during transit stops. This too was rejected.
• A fashion industry manager sought to deduct over $10,000 in designer clothing and accessories. The ATO ruled the items were conventional and not eligible.

ATO Assistant Commissioner Rob Thomson emphasized that while most taxpayers do the right thing, exaggerated or ineligible claims won’t be tolerated. “Work-related expenses must be directly tied to earning your income – and you need to be able to prove it,” he said.

Key Focus Areas for 2025

This year, the ATO is paying close attention to:

• Work-related expenses
• Working from home deductions
• Income from multiple sources, including side hustles

To be eligible for a deduction, expenses must:

1. Be directly related to your income-earning activities.
2. Not be private or domestic in nature (e.g. travel to and from work, childcare).
3. Be supported by records such as receipts or invoices.

“If your claim doesn’t pass the ‘pub test,’ it probably won’t pass the ATO’s criteria either,” Thomson warned.

Working from Home? Know Your Options

With over 10 million Australians claiming work-related deductions in 2024, working from home remains a major area of focus. There are two methods to calculate your deduction:

• Fixed Rate Method: Claim 70 cents per hour worked from home. This covers running costs like electricity, internet, phone and stationery. You cannot claim these items separately.
• Actual Cost Method: Claim the actual expenses incurred, with detailed records to substantiate the work-related portion.

To qualify, you must be genuinely working from home (not just performing minimal tasks) and have incurred additional costs as a result.

Declare All Income Sources

The ATO is also reminding taxpayers to declare all income, including from side gigs such as ride-sharing or freelance work. Each income stream may have different eligible deductions, so it’s important to understand what applies to your situation.

Make Record-Keeping Easier

The ATO’s myDeductions tool can help you track expenses throughout the year and simplify the process of lodging your return.