As we roll around to the busy tax season, it is important to be reminded that work-related expenses must have a close connection to your income-earning activities. This should be backed up with records such as a proper tax receipt (not an eftpos machine receipt) or invoice.
 
The Australian Taxation Office has detailed its priorities for the 2025 tax period and noted below are some of the tax deduction attempts it has seen over the years.

As the urban sprawl continues in most major Australian cities, we are often asked to advise on the tax treatment of subdivision projects. Before jumping in and committing to anything, it is important to understand the tax liabilities that might arise from these projects.

Unfortunately, many people make incorrect assumptions about the way that subdivision projects will be taxed, often believing that any tax exposure will be minimal. However, the reality is that there are a number of important issues that need to be considered and that could have a significant impact on the overall profitability of the project.

The ATO has updated its small business benchmarks with the latest data taken from the 2022–23 financial year. These benchmarks cover 100 industries and allow small businesses to compare their performance, including turnover and expenses, against others in their industry.

The amount of money that can be transferred to a tax-free retirement account will increase to $2m on 1 July 2025.

Each year, advisers await the December inflation statistics to the be released. The reason is simple, the transfer balance cap – the amount that can be transferred to a tax-free retirement account – is indexed to the Consumer Price Index (CPI) released each December. If inflation goes up, the general transfer balance cap is indexed in increments of $100,000 at the start of the financial year.

The superannuation guarantee rules are broad and, in some circumstances, extend beyond the definition of common law employees to some directors, contractors, entertainers, sports persons and other workers.

Employers need to pay compulsory superannuation guarantee (SG) to those considered employees under the definition in the SG rules. But, the SG definition of an employee is broad and just how far this definition extends has sparked debate of late about the rights of performers, gym instructors and others not typically considered employees.

For employers and business owners, it is crucially important that if there is any uncertainty about the rights of workers to SG, your position is confirmed.

From 1 July 2026, personal income tax rates will change.

On the last sitting day of Parliament, the personal income tax rate reduction announced in the 2025-26 Federal Budget was confirmed. The modest reduction of 1% applies to the $18,201-$45,000 tax bracket, reducing from its current rate of 16% to 15% from 1 July 2026, then to 14% from 2027-28. The saving from the tax cut represents a maximum of $268 in the 2026-27 year and $536 from the 2027-28 year.

The ATO has flagged a number of risks that attract its attention when small businesses incorrectly claim deductions and concessions.

The ATO is warning taxpayers about unlawful tax schemes that are being promoted online and offered to taxpayers when they least expect it.  

Tax professionals are being encouraged to inform clients about the risks of tax schemes that may be promoted online on social media, which promise to avoid or significantly reduce tax. Taxpayers who become involved in tax schemes can end up facing heavy penalties.  

The ATO is focusing on small businesses that deliberately operate outside the tax, super and registry system. In particular, it is focusing on contractors that incorrectly report or omit income and taxi and ride-sourcing providers that are not registered for GST.