The Australian Taxation Office (ATO) is warning taxpayers to stop claiming private expenses as work-related deductions, with some attempting to claim baby expenses, personal gifts, and meal deliveries. More than 10 million Australians have claimed about $31 billion in work-related expenses for the 2024-25 tax year, many related to working from home.
ATO assistant commissioner Anita Challen said the agency uses data matching, analytics, and artificial intelligence to identify red flags. She noted unusual claims such as a $20,000 gift to a family member and food delivery for a virtual morning tea. “The Christmas shirt and novelty T-shirts for the Christmas party are all private expenses and not to be put in your tax return,” she said.
Common errors include incorrectly claiming work-related expenses, working from home deductions, and under-declaring income. Challen reminded taxpayers that income includes non-cash gifts and must be fully reported. For working from home claims, she stressed that “just checking a few emails in the morning or late at night” does not qualify, and additional expenses must be incurred.
Taxpayers can use two methods for claiming home office expenses. The fixed rate method allows 70 cents per hour worked from home, covering electricity, gas, phone, internet, stationery, and computer consumables. It requires records of actual hours and at least one bill for each expense type. However, it excludes high-value office equipment depreciation.
The actual cost method requires calculating the work-related portion of all expenses, including electricity, internet, phone, depreciation, and cleaning costs for a dedicated home office. This method can yield higher deductions but demands detailed record-keeping. The ATO advises consulting an accountant to choose the best method for individual circumstances.
