TAX TIME 2025

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(Source Australian Taxation Office)

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       Tax time essentials 2025   (Click to navigate ATO website)

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Frequently asked question​

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Individual Tax returns.

 

The ATO has clearly indicated across its various media channels that, this Tax Time, it will be focusing on the accuracy of claims for work-related expenses, rental properties and capital gains tax liabilities.

 

The following checklist may assist:

 

    Motor Vehicle cent per kilometer rates.The rate is:  

- 88 cents per kilometer for 2024–25.

- 85 cents per kilometer for 2023–24.

- 78 cents per kilometer for 2022–23.

 You cannot claim both fuel and electric cents per kilometer rates together.

    There are limited circumstances in which claims for conventional clothing are allowable, such as occupation-specific clothing, protective clothing, compulsory work uniforms and registered non-compulsory work uniforms (plus the cleaning of such clothing).

    The $250 non-deductible threshold for self-education expenses was removed from 1 July 2022 and therefore is now deductible from the first cent.

    The fixed rate for work from home expenses for 2024–25 is 70c per hour. 

You can claim a fixed rate for each hour you work from home during the relevant income year. The rate includes the additional running expenses you incur for:

• home and mobile internet or data expenses

• mobile and home phone usage expenses

• electricity and gas (energy expenses) for heating, cooling and lighting

• stationery and computer consumables, such as printer ink and paper.

The rate per work hour includes the total deductible expenses for the above additional running expenses. If you're using this method, you can't claim an additional separate deduction for these expenses.

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The fixed rate method (52 cents per hour) and the temporary shortcut method (80 cents per hour) for working from home (WFH) expenses both ended on 30 June 2022. From 1 July 2022, the ATO’s administrative approach in PCG 2023/1 indicates that the ATO will not apply compliance resources if taxpayers claim WFH expenses at the rate of 67 cents per hour. From 1 March 2023 to 30 June 2023 (and later income years), taxpayers must keep a record of the total number of actual hours WFH, while from 1 July 2022 to 28 February 2023 only, the ATO will allow taxpayers to keep a representative record of the total number of hours WFH. 67c cent rate is applicable for FY 2024.

    The ATO’s Occupation and industry specific guides are a useful reminder to tax payers about what they can and cannot claim.

    Ensure all rental income received, and do not declare net rent (instead of gross rent) then claim expenses (such as property management fees) again against the net rent.

    Ensure that interest expenses are correctly apportioned where the property is used for private use, the property is not genuinely available for rent or there is mixed use of borrowed funds.

    Correctly apportion borrowing expenses over the five-year period (but not on a straight line basis), or the term of loan if less.

    Correctly characterize building expenditure as a deductible repair, a non-deductible initial repair or capital works.

    The limitation on travel expenses and second-hand depreciate assets relating to residential rental properties applies from 1 July 2017. 

    Ensure all capital gains on cryptocurrency, shares and properties (as well as other CGT assets) are correctly calculated and reported. Record keeping is essential to this.

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Small Business Skills and Training Boost ended on 30th June 2024.

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Bonus tax deduction for small businesses accessing external training for their employees.

This initiative provides small businesses with a bonus tax deduction to help them train new staff and upskill existing staff. 

Small businesses with an aggregated annual turnover of less than $50 million will be allowed an additional 20% tax deduction for external training courses delivered to employees by registered training providers.

The boost applies to eligible expenditure incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2024.

The expenditure must be:

• for the provision of training to employees of your business, either in-person in Australia, or online

• charged, directly or indirectly, by a registered external training provider that is not you or an associate of yours

• already deductible for your business under taxation law

• incurred within a specified period (between 7:30 pm AEDT or by legal time in the ACT on 29 March 2022 and 30 June 2024).

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Recovery Grant for Small Businesses and Non-Profit Organisations

 

Payment amount: Up to $25,000 is available to eligible businesses and non-profit organisations, including:

• an initial payment of up to $5,000 for immediate recovery costs

• a further amount of up to $20,000 with additional supporting documentation. 

Applications close: 11:59pm on  11 December 2025

If you’re a small business or non-profit organisation impacted by recent severe weather events, you may be eligible for a grant to help with the costs of clean-up, repairs and reopening.

A grant of up to $25,000 is available to eligible small businesses and non-profit organisations in impacted Local Government Areas (LGAs) that suffered direct damage as a result of:

• NSW East Coast Severe Weather from 18 May 2025 (AGRN 1212), or

• Tropical Cyclone Alfred Severe Weather from 3 March 2025 (AGRN 1198)

 

To be eligible, your business or non-profit organisation must:

• have been operating in an impacted LGA listed under AGRN 1212 or AGRN 1198

• have suffered direct damage as a result of NSW East Coast Severe Weather from 18 May 2025, or Tropical Cyclone Alfred Severe Weather from 3 March 2025

• have an active Australian Business Number (ABN) and have held that ABN at the time of the disaster

• intend to re-establish operations within the same area

• not be fully insured and claiming all recovery costs through insurance.

Refer to the Guidelines for the full list of eligibility criteria.

If you’re a small business or sole trader, you must:

• employ up to 20 full-time staff or equivalent, or

• be a sole trader receiving at least 50% of your income from the business.

If you're a non-profit organisation

• You must be registered with the Australian Charities and Not-for-profits Commission or an equivalent body.

• You must not be included on the National Redress Scheme's website on the list of 'Institutions that have not joined or signified their intent to join the Scheme'.

 

What's covered

Covered costs include, but are not limited to:

• payment for tradespeople to conduct safety inspections

• equipment, materials or personnel needed to clean up or immediately resume operations

• removal and disposal of debris, damaged materials or damaged stock

• essential repairs to premises and internal fittings

• leasing a temporary premises within the disaster area so the business can start operating again

• replacing or repairing motor vehicles registered for business use

• replacing lost or damaged stock essential for resuming operations.

Refer to the Guidelines for more information on what can and cannot be claimed at 

https://www.service.nsw.gov.au/transaction/small-business-recovery-grant-agrn-1198-1212

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What you need

• a MyServiceNSW Account

  • you can create one when you start your application

  • you may need details from 2 identity documents (such as Australian driver licence, Medicare card, passport)

• your valid ABN/ACN number
  Note: If the information associated with your ABN is incorrect or does not exactly match your identity document details, your application may be delayed. Make sure your ABN details are up to date on the Australian Business Register (ABR)

• evidence of your non-profit status (if applicable)

• Australian bank account details for payment.

Supporting documents

Have the following documents and photos ready to be uploaded in JPG, PDF, PNG, or TIF format:

• a rates notice or lease agreement to show that the business was operating in an impacted LGA

• 5 – 10 photographs of the direct damage

• evidence of payment:

  • for applications of up to $5,000 for immediate costs, you will need copies of estimates or a list of damaged items

  • for applications over $5,000 and up to $25,000, you will need copies of tax invoices and evidence that these invoices have been paid (e.g. bank statements, electronic bank transfer confirmations or official supplier receipts).

• details of your business insurance if you have it

• a letter of authority to show you’re authorised to act on behalf of the business if you’re not the business owner.

 

Auditing requirements

To prevent any fraud activity, you may be selected for random auditing if you’re approved for payment.

You must keep all documentation and evidence related to your application for a minimum of 24 months. This includes keeping receipts for all spending. You must be able to provide this evidence on request

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Instant asset write-off for eligible businesses.

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Work out if your business can use the instant asset write-off to claim a deduction for the cost of an asset.

Last updated 7 July 2025- ATO click here >>>

About the instant asset write-off.

Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.

The instant asset write-off can be used for:

• multiple assets if the cost of each individual asset is less than the relevant limit

• new and second-hand assets.

For an asset for which you have claimed an immediate deduction under the simplified depreciation rules in a prior income year, small businesses can also immediately deduct an amount included in the second element (cost addition) of that asset's cost, where the amount is:

• the first deductible amount of second element cost incurred after the end of the income year in which the asset was written off

• less than the relevant limit amount for the income year it is being claimed.

If you are a small business, you need to apply the simplified depreciation rules to claim the instant asset write-off. It cannot be used for assets that are excluded from those rules.

The instant asset write-off eligibility criteria and limit have changed over time. You need to check your business's eligibility and apply the relevant limit amount. The income year in which you may claim an instant asset write-off depends on when the asset was purchased, first used or installed ready for use.​

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Instant asset write-off limits for small businesses Please click here.. 

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Tax offsets, check if you are eligible-ATO

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Private health insurance statements

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From 1 July 2019, health insurers are no longer required to send private health insurance statements. Previously they were required to send statements by 15 July each year, it is now optional to send this information.

Private health insurance information will be available in the pre-fill report, usually by mid-August. If it is not populated by then, taxpayers may need to request a statement from their health insurer.

It is important to correctly report private health insurance information as we use it to calculate:

• private health insurance rebates taxpayers are entitled to

• the Medicare levy surcharge, if applicable.

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Low and middle income earner tax offset

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LMITO not available 2022–23 income year on wards.

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Income statement

If an employer reports through Single Touch Payroll they are not required to provide a payment summary to their employees.

Income statements will replace payment summaries. Employees can access their income statements through ATO online services via my Gov, at any time. Employees will receive a notification from us in their my Gov inbox when their income statement is 'Tax ready', so they can complete their tax return.

Employees will be able to contact us for a copy of their income statement if they do not have access to my Gov.

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• Accessing your income statement or payment summary information online

Research and development tax incentive amendments

On 8 May 2018, the government announced it would reform the research and development (R&D) tax incentive to encourage additional investment in R&D while ensuring the integrity and fiscal affordability of the incentive. These changes are expected to apply for income years commencing on or after 1 July 2018.

We will accept tax returns as lodged during the period up until the proposed law change is passed by parliament. After the new law is passed, taxpayers will need to review their position and, if required, seek an amendment.

See also:

• Research and development tax incentive - ATO

Hybrid mismatch rules

On 24 August 2018, legislation was passed implementing the Organisation for Economic Cooperation and Development (OECD) hybrid mismatch rules. These rules apply to income years starting on or after 1 January 2019.

However, unless an importing payment is made under a structured arrangement, the imported mismatch rule will apply to income years starting on or after 1 January 2020.

The hybrid mismatch rules prevent entities that are liable to income tax in Australia from avoiding income tax or obtaining global double tax benefits through hybrid mismatch arrangements that exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.

The rules operate to deny a deduction, or include an amount in assessable income for payments that give rise to a hybrid mismatch outcome.

See also:

• Implementation of the OECD hybrid mismatch rules

Increasing access to company losses

On 1 March 2019, legislation was passed that will supplement the current ‘same business test’ for losses with a more flexible 'similar business test'. The new test will expand access to past year losses when companies enter into new transactions or business activities.

The similar business test allows a company (and certain trusts) to access losses following a change in ownership where its business, while not the same, is similar, having regard to the:

• extent to which the assets that are used in its current business to generate assessable income were also used in its former business to generate assessable income

• extent to which the activities and operations from which its current business is generating assessable income were also the activities and operations from which its former business generated assessable income

• identity of its current business and the identity of its former business

• extent to which any changes to the former business resulted from the development or commercialisation of assets, products, processes, services, or marketing or organisational methods of the former business.

As a test for accessing past year losses, the 'similar business test' will only be available for losses made in income years starting on or after 1 July 2015.

The 'same business test' and the 'similar business test' will be collectively known as the 'business continuity test'.

See also:

• Increasing access to company losses

• LCR 2017/D6 The business continuity test – carrying on a similar business

 

Changes to the thin capitalization rules to prevent double gearing structures

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On 5 April 2019, legislation was passed to improve the integrity of the income tax law by modifying the thin capitalization rules to prevent double gearing structures. Double gearing structures involve the use of multiple layers of ‘flow-through’ entities (such as trusts and partnerships) to issue debt against the same underlying asset.

These changes apply to income years starting on or after 1 July 2018.

The changes will affect entities with interests in trusts (other than public trading trusts) and partnerships, as the threshold for the purposes of the associate entity debt, associate entity equity, and the associate entity excess amounts has been reduced from 50% to 10%.

The changes also affect how the arm’s length debt amount is calculated. To determine both the independent lender and independent borrower amounts of the test, an entity must consider the debt-to-equity ratios of any other entity in which it has an interest.

 

 

Foreign resident capital gains withholding payments - impacts on foreign and Australian residents.

 

 

Foreign resident capital gains withholding applies to vendors disposing of certain taxable Australian property. A 12.5% non-final withholding is applied to these transactions at settlement.

The assets subject to the withholding tax are:

• taxable Australian real property with a market value of $750,000 or more

• an indirect Australian real property interest

• an option or right to acquire such property or interest.

Where the seller of these Australian assets is deemed a foreign resident, the buyer must pay 12.5% of the purchase price to the ATO as a foreign resident capital gains withholding payment.

The foreign resident seller can claim a credit for the foreign resident capital gains withholding payment by lodging a tax return for the relevant year.

See also:

• Foreign resident capital gains withholding payment.

 

Background

 

Broadly, where a foreign resident disposes of certain taxable Australian property, the purchaser is required to withhold an amount from the purchase price (see note below) and pay that amount to the Australian Taxation Office (ATO).

Note: the legislation specifies that the withholding is actually on the "first element of the cost base". However, as purchase price is understood by vendors and purchasers, and in many instances will equate with the "first element of the cost base", we have used the term purchase price for simplicity.

Annual charge on foreign owners of under utilized residential property.

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The vacancy fee is part of the Government's comprehensive housing affordability plan that was announced on 9 May 2017. This measure is intended to encourage foreign owners of residential dwellings to make them available for rent where they are not used as a residence and so increase the number of dwellings available for Australians to live in. The reporting and notification requirements are also expected to provide greater visibility of vacancy rates for foreign owned residential dwellings.

On 30 November 2017 the Treasury Laws Amendment (Housing Tax Integrity) Act 2017 received royal assent. The Act amends the Foreign Acquisitions and Takeovers Act 1975 to require foreign owners of residential dwellings to annually inform the ATO whether the dwelling is residentially occupied or genuinely available on the rental market as a residence for at least six months per year. If the person fails to notify the ATO or notifies the ATO that the dwelling is not residentially occupied or genuinely available on the rental market as a residence for at least six months per year they will be liable for a fee. The fee will be equivalent to the relevant foreign investment application fee for the property at the time it was acquired by the foreign investor.

The obligations under the Act apply to foreign persons who make a foreign investment application for residential property from 7:30PM (AEST) on 9 May 2017. The obligations also apply to foreign purchasers who acquire residential dwellings utilising a New Dwelling Exemption Certificate where the certificate was applied for from 7.30PM (AEST) on 9 May 2017.

Legislation and supporting material

The Treasury Laws Amendment (Housing Tax Integrity) Act 2017External Link received royal assent on 30 November 2017

Limit plant and equipment depreciation deductions to outlays actually incurred by investors.

 

Income tax deductions for the decline in value of previously used plant and equipment in rental premises used for residential accommodation are no longer allowed. The changes are now law.

 

The changes apply from 1 July 2017 to:

• previously used plant and equipment acquired at or after 7.30 pm on 9 May 2017 unless it was acquired under a contract entered into before this time

• plant and equipment acquired before 1 July 2017 but not used to earn income in either the current or previous year.

Investors who purchase new plant and equipment will continue to be able to claim a deduction over the effective life of the asset.

The changes do not affect deductions that arise in the course of carrying on a business, or for:

• corporate tax entities

• superannuation plans other than self-managed superannuation funds

• public unit trusts

• managed investment trusts

• unit trusts or partnerships whose members are the above listed entities.

Legislation and supporting material

The Treasury Laws Amendment (Housing Tax Integrity) Act 2017External Link received royal assent on 30 November 2017.

See also:

• Media release No. 86External Link issued on 7 September 2017 by the Treasurer and the Assistant Minister to the Treasurer

• Media release No. 46External Link issued on 9 May 2017 by the Treasurer and the Assistant Minister to the Treasurer

Disallow the deduction of travel expenses for residential rental property.

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From 1 July 2017, travel expenses relating to inspecting, maintaining, or collecting rent for a residential rental property cannot be claimed as deductions by investors. The changes are now law. The travel expenditure is also not recognised in the cost base of the property for CGT purposes.

You can continue to deduct travel expenditure if:

• the losses or outgoings are necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income; or

• you are an excluded class of entity.

An excluded class of entity is:

• a corporate tax entity;

• a superannuation plan that is not a self-managed superannuation fund;

• a public unit trust;

• a managed investment trust; or

• a unit trust or a partnership, members of which are entities of a type listed above.

Legislation and supporting material

The Treasury Laws Amendment (Housing Tax Integrity) Act 2017External Link received royal assent on 30 November 2017.

See also:

• Media release No. 86External Link issued on 7 September 2017 by the Treasurer and the Assistant Minister to the Treasurer

• Media release No. 46External Link issued on 9 May 2017 by the Treasurer and the Assistant Minister to the Treasurer

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Black Economy Task force - prohibition on sales suppression technology and software.

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On 9 May 2017, the Government announced that the manufacture, distribution, possession, use or sale of electronic point of sale (POS) sales suppression technology and software will be prohibited.

Sales suppression technology and software allows businesses to understate their incomes by untraceably deleting selected transactions from electronic records in POS equipment.

Source: Australian Tax office - www.ato.gov.au