ATO Issues 2025 Tax Return Guidelines: What Australians Need to Know

As the end of the financial year approaches, over 15 million Australians are gearing up to lodge their 2025 tax returns. The Australian Taxation Office (ATO) has released its updated guidelines, aiming to simplify the process while also cracking down on non-compliance. Whether you file through an accountant or via your MyGov account, understanding these updates can help you avoid errors and maximise your refund.

This year, around 60% of taxpayers will rely on accountants, while the remaining 40% will submit their returns through MyGov. The ATO continues to enhance its data-matching capabilities, receiving up to 1,000 tip-offs per week—90% of which are considered worthy of investigation. These figures underline the importance of accuracy and transparency when submitting tax returns.

The ATO now pre-fills a significant portion of taxpayer income, including salary, superannuation, and some bank interest or dividends. However, this data may not be complete by July 1. Taxpayers are advised to wait until their income statements are marked “tax ready” in MyGov to avoid filing incomplete or inaccurate returns. Investment income, including capital gains or income from side jobs under an ABN, must be added manually.

Certain items such as private health insurance details are only partially pre-filled, so extra care is needed. Inaccurate information or omitted income could trigger audits and penalties. It’s also essential to disclose all forms of income—from renting out a room to earning money via ride-share apps or selling goods online.

The ATO has placed special emphasis on specific deduction areas in 2025. These include work-from-home expenses, motor vehicle use, rental properties, and cryptocurrency transactions.

For remote workers, two deduction methods are available: the fixed rate method at 70 cents per hour and the actual cost method. While the fixed rate covers costs like electricity and internet, it does not include depreciation or cleaning of a home office. The actual cost method requires a dedicated workspace and removal of all personal use.

Claiming the same expense twice—such as mobile and internet under both the fixed rate and as individual line items—is a red flag. Only one method should be used, and accurate records must be maintained.

Motor vehicle deductions can also be calculated using two methods. The logbook method requires 12 weeks of documented usage, after which business-use percentages are applied to all vehicle-related expenses. Alternatively, the cents-per-kilometre method allows for a claim of 88 cents per kilometre, capped at 5,000 kilometres, without needing receipts—but the claimed kilometres must be justifiable.

Rental property owners should avoid claiming personal expenses. Interest deductions should strictly relate to the investment property, and if ownership is split, deductions must be proportionate. Holiday homes can only be claimed for periods they were actually rented.

Cryptocurrency investors must declare all capital gains and losses. The ATO treats crypto like other investment assets, requiring clear records of buying and selling activity. Meanwhile, gig economy participants and online sellers are reminded that their earnings are taxable and could be classified as business income depending on scale and consistency.

The ATO’s extensive data-matching makes cheating nearly impossible. Cross-checks are made against share registries, banks, and health insurers. Even social media and online marketplaces are being monitored. If discrepancies arise, the ATO may contact you for clarification, and penalties of up to 75% of the tax owed could apply for intentional misreporting.

Taxpayers are advised not to make dubious claims. Attempts to deduct non-work-related purchases—like luxury items, pets as mascots, or family vacations disguised as business trips—can trigger audits. Some past attempts have included school uniforms, kids' sporting gear, and even holiday wine under the guise of “research”.

Mistakes do happen, and the ATO allows for amendments via MyTax without penalty if it deems the error was made despite reasonable care. However, unpaid tax must still be repaid. The deadline for filing returns is October 31, though extensions are possible upon request.

An easy way to maintain records is through the ATO’s myDeductions app, which allows taxpayers to scan receipts and sort expenses by category, simplifying the process when it’s time to lodge a return.

Ultimately, the ATO’s message is clear: be accurate, be honest, and be timely. With pre-filled data, powerful analytics, and strict auditing, cutting corners is more likely to backfire than lead to a bigger refund. For most Australians, a careful and compliant approach will ensure a smooth tax season and, hopefully, a well-earned refund.