As the 2025 financial year draws to a close, the Australian Taxation Office (ATO) has outlined its key compliance focus areas to ensure the integrity of the tax system. With growing digital transparency, data-matching capabilities, and ongoing post-pandemic economic shifts, the ATO is zeroing in on several high-risk areas. Understanding these compliance priorities is critical for businesses, individuals, and tax professionals aiming to avoid costly audits or penalties.

1. Work-Related Expenses: Accuracy Under Scrutiny

Claiming work-related expenses remains one of the ATO’s most closely monitored areas. In 2025, the ATO is specifically targeting:

• Incorrect or inflated deductions: With increased data matching, especially from employers and financial institutions, the ATO is cracking down on claims that don't match income or occupation type.
• Working from home expenses: New fixed-rate methods introduced post-COVID are under review. The ATO expects clear records such as diaries, bills, and substantiation to support these claims.

2. Rental Property Income and Deductions

With the continued growth in investment properties, rental-related deductions are under the microscope. The ATO is using advanced data analytics, including information from property managers, Airbnb, and real estate portals to spot:

• Omitted rental income: Including income from short-term rentals or subletting.
• Overstated deductions: Particularly around loan interest, repairs vs capital improvements, and depreciation.

3. Crypto and Digital Assets

Cryptocurrency remains a high-priority focus area in 2025. The ATO is leveraging third-party data from exchanges to track:

• Unreported capital gains or losses

• Personal use vs investment classification

• Income from DeFi (decentralised finance) and staking

Failure to declare crypto-related earnings is considered a serious compliance breach, especially with tightened international information-sharing frameworks in place.

4. Small Business Income and GST Reporting

Small businesses are under review for under-reporting income, misclassifying expenses, and incorrect GST reporting. The ATO is especially focused on:

• Electronic sales suppression tools (ESSTs): Illegal software that modifies sales data is being actively prosecuted.
• Cash economy: While digital payments dominate, under-the-table transactions are still a red flag.
• JobKeeper and COVID-era grant audits: Compliance checks continue into 2025 to verify proper use and reporting of past government support.

5. Superannuation Guarantee (SG) Compliance

Ensuring employers meet their super obligations remains a key area. The ATO is:

• Cross-matching payroll data with Single Touch Payroll (STP) submissions.

• Pursuing employers who fail to pay SG on time or in full.

• Focusing on gig economy platforms and contractors potentially misclassified as independent rather than employees.

6. Trusts and High-Net-Worth Individuals

The use of trusts and complex structures to reduce taxable income continues to draw ATO scrutiny. In 2025, the compliance spotlight is on:

• Distributions to adult children or low-taxed beneficiaries: Particularly where these arrangements appear artificial.
• Family trust elections and trust loss provisions: The ATO expects rigorous compliance with anti-avoidance rules.

• Actively pursuing late lodgers and non-lodgers.

• Charging interest and penalties for overdue returns or payments.

• Encouraging early engagement for those experiencing financial hardship.

Final Thoughts: Staying Compliant in 2025

The ATO’s message is clear: transparency, data accuracy, and substantiation are non-negotiable. Whether you're an employee, investor, business owner, or trustee, proactive record-keeping and professional advice are essential. Engaging a registered tax agent and using official ATO tools and guidance can significantly reduce the risk of audit or dispute.

The old adage should always apply when it comes to tax lodgement: If your claims are right, you have nothing to fear.

Please contact one of our friendly Tax Store agents to work with you this tax time to ensure full compliance.