Every year, the Australian Taxation Office (ATO) signals which areas it will look at most closely, and getting ahead of these focus areas is the easiest way to lodge an accurate return without delays.
For your 2025-26 tax return, the ATO has been clear about where it’s directing its attention: work-from-home claims, rental property deductions, side hustle and gig economy income, and multiple income sources such as shares and crypto.
This isn’t about avoiding an audit. It’s about understanding what the ATO expects, so your return is right the first time. Here’s what individuals, sole traders, contractors, property investors, share investors and small business owners need to know before lodging their ATO tax return for 2025-26.
What’s New for the 2025-26 Tax Year
A few practical changes are worth noting before you start:
- Working-from-home fixed rates: The fixed rate method remains at 70 cents per hour for 2025-26. This covers electricity, gas, internet, phone and stationery. You can’t claim these separately on top of it.
- $1,000 instant deduction: You may have seen headlines about a simplified $1,000 work-related expense deduction. This applies from the 2026-27 income year, not the current one, so it doesn’t apply to your 2025-26 return.
- Holiday home and mixed-use property guidance: The ATO has sharpened its focus on properties advertised as available for rent but also used privately. Deductions may be reduced where there’s no genuine commercial intention to let the property.
- Data-matching: The ATO now cross-checks tax returns against banks, share registries, crypto exchanges and gig economy platforms reporting under the sharing economy reporting regime. If income was paid to you, there’s a good chance the ATO already has a record of it.
The ATO’s Key Compliance Focus Areas for Tax Time 2025-26
The ATO’s tax return priorities this year fall into four broad areas.
1. Work-related expense claims and working-from-home deductions
Work-related expenses remain one of the largest contributors to the Australian individual “tax gap.” The ATO’s main concern isn’t that people claim deductions; it’s that many claims aren’t properly substantiated.
If you use the 70 cents per hour fixed rate, keep a record of the actual hours you worked from home, such as a diary, spreadsheet or timesheet. Estimates aren’t accepted, and you can’t claim phone, internet, electricity or stationery separately because they’re already included in the rate.
You can also use the actual cost method, which allows you to claim the work-related share of your expenses. However, you’ll need to keep receipts and records showing how you worked out the work-related portion of each expense. An individual tax accountant can help you choose whichever method gives you the better outcome.
Example: Claiming Work-From-Home Expenses Correctly
Priya works as a marketing coordinator and spends three days a week working from home. She keeps a simple spreadsheet to record the hours she works from home throughout the year.
By 30 June, she has logged 620 hours.
She uses the fixed rate method to calculate her deduction:
620 hours × $0.70 = $434
Because she kept accurate records as she went, she has the evidence needed to support her claim if the ATO asks for it.
2. Rental property deductions
Rental property deductions continue to generate some of the highest error rates in ATO reviews. Common problem areas include:
- Claiming 100% of loan interest when part of the loan was refinanced for private purposes
- Claiming repairs on a property before it was first available for rent
- Treating capital improvements (a new kitchen, a deck, a bathroom renovation) as immediate repairs, when they should be depreciated over time
- Claiming full expenses on a holiday home that’s also used personally, without apportioning for private use
- Missing a quantity surveyor’s depreciation schedule
Example: Property investor claiming eligible deductions correctly
Mark owns an investment unit that is rented out through a property manager. During the year, he pays $18,400 in loan interest, $2,100 in property management fees, $950 in council rates and $600 to fix a plumbing leak reported by the tenant. Since these expenses relate to the rental property, he claims them and keeps the receipts and the property manager’s statements.
He also replaces the hot water system, but he doesn’t claim the full cost straight away. Because it’s an improvement to the property, it’s claimed over time through depreciation rather than as an immediate deduction. A property tax accountant can help you work out which expenses are immediately deductible and which need to be depreciated.
3. Investment income, shares, dividends, ETFs and crypto
Dividends, distributions from managed funds and ETFs, and capital gains or losses from shares and crypto assets are largely pre-filled by the ATO from data provided by share registries, fund managers and crypto exchanges. If your own records don’t match this pre-filled data, it’s a common trigger for ATO follow-up. Every crypto disposal, including swapping one coin for another, is a capital gains tax event that needs to be reported, not just cashing out to Australian dollars. If you’ve traded shares or crypto this year, a cryptocurrency accountant can help you reconcile your records against the ATO’s pre-filled data.
4. Side hustle and gig economy income
Under the Sharing Economy Reporting Regime, platforms such as Uber, Airbnb, Airtasker and similar services report earnings directly to the ATO. This means undeclared platform income is easy for the ATO to detect. If your side income is growing, it may be worth talking to us about your business tax obligations before it becomes a bigger issue at tax time.
Matching ATO Pre-Filled Data
Most salary and wage income, bank interest, dividends and private health insurance details are pre-filled into myTax by mid-to-late July. It’s worth waiting until late July before lodging, so this data has time to load.
Rushing to lodge your tax return on 1 July can create extra work if information is still missing. Always review the pre-filled details and make sure you’ve included all of your income before you submit.
Keeping Receipts and Records
For any deduction, three basic rules apply: you paid for it yourself and weren’t reimbursed, it directly relates to earning your income, and you have a record to prove it. Good habits include:
- Keeping receipts, invoices and bank statements for at least five years.
- Logging work-from-home hours as you go, rather than estimating in July.
- Keeping a vehicle logbook if you claim car expenses using the logbook method.
- Retaining loan statements and depreciation schedules for rental properties.
- Storing everything digitally, so nothing gets lost before tax time.
Common Tax Return Mistakes to Avoid
Some of the most frequent tax return mistakes Australia-wide include:
- Double-dipping, claiming phone or internet costs on top of the working-from-home fixed rate
- Claiming private expenses as work-related, or not apportioning for private use
- Forgetting to declare income from a second job, platform work or overseas sources
- Claiming repairs on rental properties that are really capital improvements
- Relying on memory instead of records when lodging
How to Prepare Before Lodging
- Gather income statements, bank interest summaries, dividend and managed fund statements.
- Pull together receipts and logs for any deductions you plan to claim.
- Check your ATO pre-filled data once it’s available, and compare it against your own records.
- List any rental property income and expenses, supported by your property manager’s annual statement.
- Note any capital gains events — property, shares, ETFs or crypto — sold during the year.
- Confirm your private health insurance and any government payments received.
Should You Lodge Yourself or Use a Registered Tax Agent?
Simple tax returns with a single employer and no investments can often be lodged confidently through myTax. But once you have rental properties, multiple income streams, capital gains, or a side business, the rules become much more complex.
Understanding which deductions you can claim, how to apportion expenses correctly, and what the ATO is paying closer attention to can make a significant difference. A registered tax agent can also secure you a lodgement extension beyond the standard 31 October deadline.
If you want a clearer understanding of these rules before lodging your return, watch our latest YouTube video. We explain the common mistakes, walk through real-world examples, and break down the ATO requirements in simple, practical terms so you can lodge your tax return with confidence.
FAQs
What is the ATO focusing on this tax year?
The ATO is focusing on work-related expenses, working-from-home claims, rental property deductions, investment income, cryptocurrency transactions, side hustle income and ensuring taxpayers report all income accurately.
What deductions can I claim for 2025-26?
You can claim deductions for things like work-related expenses, home office costs, self-education, charitable donations and some investment expenses if you’re eligible. Just make sure you have the records to support your claim.
What happens if I make a mistake on my tax return?
If you make an honest mistake, you can usually amend your tax return. Depending on the circumstances, the ATO may adjust your assessment and, in some cases, apply interest or penalties.
Can I amend my tax return after lodging?
Yes. If you discover an error after lodging, you can generally request an amendment through the ATO or your registered tax agent.
Should I lodge my own tax return or use a registered tax agent?
Simple tax returns may be suitable for self-lodgement. If your tax affairs involve investments, rental properties, business income or multiple income sources, using a registered tax agent can help ensure your return is accurate and complete.
