Tax Deductions Australia 2025: What Can You Claim This Tax Time?

When tax time arrives, one question always comes up: “What can I claim?”

Claiming eligible tax deductions helps lower your taxable income – meaning you legally pay less tax. But if you over-claim or guess, you risk audits, penalties, and ATO adjustments.

In this 2025 guide, we break down the key tax deductions for both individuals and business owners in Australia.

2. Tax Deductions for Individuals

Here are the main deductions Australian salary and wage earners may be able to claim:

Work-Related Expenses

• Uniforms, protective clothing, and tools directly related to your job (not reimbursed by your employer).
• Uniforms usually must have a company logo or be occupation-specific to qualify.
• If your employer gives you an allowance for these, you can still claim actual costs if you have receipts.
• Laundry of uniforms is also claimable for eligible uniforms.

Union Fees & Memberships Tax Deductions

• Union fees and professional association memberships that relate to your job can be deducted.
• In many cases, union fees can be deducted from your salary by your employer and will appear in your ATO pre-fill report when you lodge your tax return.
• Even if they appear in the pre-fill, it’s still your responsibility to check they’ve been included correctly.

Home Office Tax Deductions in Australia

• If you work from home, the ATO’s fixed rate method (currently 67 cents/hour) covers running costs like power, internet, phone, stationery, and computer consumables.
• You must keep a detailed record of actual hours worked from home – estimates are not accepted.
• You may also choose to claim actual expenses with full receipts.
• Check out our blog post on this topic > New Working From Home Deduction Rules – Changes to Recordkeeping

Self-Education Tax Deductions (ATO 2025 Rules)

• Courses must directly relate to improving skills in your current role.
• The ATO excludes study aimed at starting a new career or qualification.

Vehicle & Travel

• Work-related travel may be deductible if your employer requires you to travel (excluding commuting).
• You need to keep a logbook or travel diary for accurate claims.
• If you receive a travel or car allowance from your employer:
  
  • The allowance will usually be included in your taxable income.
  • You can then claim a deduction for your actual work-related travel expenses against the allowance.
  • Keep detailed records (logbooks, receipts, or kilometres travelled) to substantiate your claim.
  • Check out the ATO My Deductions app to track these through the year

Donations

• Only donations to registered charities (DGRs) are deductible. You can verify eligibility via the ACNC register.

Tax Agent Fees

• Tax agent or accountant fees paid for last year’s return are deductible this year.

Income Protection Insurance

• Premiums for income protection insurance may be deductible (life insurance premiums are not).

Rental Property Deductions

If you own an investment property:

• Loan interest
• Council rates and property insurance
• Land Tax
• Agent management fees
• Repairs (not renovations)
• Depreciation on eligible assets

Phone & Internet

• If your mobile or internet is partly used for work, you can claim a proportional deduction.
• Keep usage records to justify the claim.

3. Business Tax Deductions

For sole traders, partnerships, companies and trusts, here are the most common business tax deductions for 2025:

Home Office Expenses

• A percentage of home office costs may be deductible if you’re genuinely running your business from home.

Business Equipment

• Laptops, monitors, phones, software subscriptions, etc.
• Eligible assets under $20,000 may qualify for the small business instant asset write-off.
• Larger items may need to be depreciated.

Professional Services

• Accounting, legal, tax, advisory and CFO services.
• Note: Business coaching must directly relate to earning business income. Personal development coaching is generally not deductible.

Business Travel Expenses

• Only business portions of travel are deductible.
• Trips over 6 nights require a travel diary detailing business activities.

Training & Education

• Courses related to improving business operations or maintaining professional accreditation are deductible.

Motor Vehicle Expenses

• Business-use percentage of vehicle running costs can be claimed.
• Accurate logbooks are required.
• If your business provides a car that’s available for private use (even limited personal use), Fringe Benefits Tax (FBT) may apply.
• Always review your private use and FBT exposure with your accountant to avoid unexpected tax liabilities.

Business Insurance Premiums

• Business insurance policies (public liability, professional indemnity, etc.) are deductible.

Superannuation Contributions

• Superannuation contributions for yourself and your employees are tax deductible – but only when they are actually paid.
• Super is deductible on a cash basis, meaning if payment hasn’t cleared by 30 June, it won’t be deductible in the current financial year.
• Late-paid super is not deductible at all and may attract Super Guarantee Charge penalties.
• Planning tip: If you want to bring forward your June quarter super deduction, ensure payment is made and received by the fund before 30 June.

Interest on Business Loans

• Interest on business-purpose loans is deductible.
• Mixing personal and business use may make interest non-deductible.

Entertainment & Business Meetings

• In most cases, entertainment expenses are not deductible for tax purposes.
• This includes things like:
  
  • Client lunches, coffees, and dinners
  • Staff parties, Christmas functions, and social events
  • Sporting events or concerts with clients or staff
  • Networking events where food or alcohol is provided
• The ATO views these as private, even if some business is discussed.
• There are limited exceptions:
  
  • If your business is in the business of providing entertainment (e.g. event management companies), some expenses may be deductible.
  • Certain minor, infrequent staff benefits may fall under the minor benefits exemption for Fringe Benefits Tax, but still not tax deductible.
• Fringe Benefits Tax (FBT) may apply if you provide entertainment to employees or associates.
• Always check before assuming any entertainment is deductible – this is one of the most commonly misclaimed areas for small businesses.
• General rule of thumb: If it feels like a “perk”, it’s probably not deductible.

GST Considerations

• If you’re GST-registered, claim business tax deductions net of GST

4. Common Tax Deduction Mistakes to Avoid

• Claiming personal expenses as business deductions.
• Over-claiming home office or travel deductions without proper records.
• Claiming expenses already reimbursed by your employer.
• Poor record-keeping.
• Leaving tax planning until after 30 June.

5. Record Keeping Requirements for Tax Deductions in Australia

The ATO requires you to retain all tax records for at least 5 years after lodgement. This includes:

• Receipts and invoices
• Logbooks and travel diaries
• Home office hour logs
• Course enrolment documents
• Written records linking expenses to your income-earning activities

6. Get Tax Advice Early

EOFY tax planning is always better done early. Working with your accountant before 30 June gives you time to:

• Maximise eligible deductions
• Structure your finances tax-effectively
• Avoid ATO audit risk

We’re already helping clients review their 2025 tax positions. If you’d like a tax planning review before EOFY, reach out now.