Landlords, WFH, side hustles and crypto: What the ATO is targeting this year
Getting it right matters more than chasing a bigger refund.
Every year around tax time, the same questions come up. What’s the ATO targeting? Are audits increasing? Has anything changed?
The reality is that the ATO’s focus areas don’t change dramatically from one year to the next. That’s because the same mistakes keep occurring.
For the 2025-26 tax year, the ATO is once again concentrating on three key areas: work-related expenses, rental property deductions and ensuring taxpayers declare all of their income.
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That shouldn’t come as a surprise. These are the areas where the greatest number of errors occur and where the ATO continues to see billions of dollars’ worth of incorrect claims each year.
What has changed is the ATO’s ability to identify those errors. With increasingly sophisticated data matching and analytics, it’s becoming much harder for claims that don’t stack up to slip through unnoticed.
The important point is that most taxpayers aren’t deliberately doing the wrong thing. In my experience, the majority simply misunderstand what they’re entitled to claim.
Work-related deductions are claimed by millions of Australians every year, so it’s inevitable they’ll remain under close scrutiny.
The biggest misconception I encounter is the belief that if something is useful for work, it’s automatically tax deductible.
Unfortunately, that’s not how the tax rules operate.
To claim a deduction, you must have paid for the expense yourself, it must directly relate to earning your income, and you need records to substantiate your claim. If there’s a private component, you can only claim the work-related portion.
That sounds straightforward, yet it’s surprising how often people get caught out.
A good example is clothing. Plenty of people believe the clothes they wear to work should be deductible because they’re required to look professional. Unless it’s a compulsory uniform, occupation-specific clothing or protective gear, that’s generally not the case.
Similarly, you can’t simply claim your entire mobile phone bill or internet costs because you occasionally use them for work. You need to work out the proportion that’s genuinely work-related.
The ATO is also likely to take a closer look at claims that appear unusually high compared with other taxpayers in similar occupations. That doesn’t mean the deduction is incorrect, but it does mean you’ll need good evidence to support it.
