FY2025 Tax Time Update: Deductions, Key Tips

As the dust settles on the 2024-25 financial year, getting your tax deductions right is crucial for maximising your return. At Invigor8, we understand that navigating tax time can feel overwhelming for small business owners. The good news? This year brings positive changes, including an increase in the car expense rate to $0.88 per kilometre and immediate write-offs available for assets under $300. Remember, proper documentation is your best friend – keep those receipts organised and be mindful of the ATO's watchlist items, such as motor vehicle claims and work-from-home deductions. Need personalised guidance? Our team is ready to help you claim every dollar you're entitled to!

Make the Most of Your Tax Return: Deductions, Super & Key Tips

As 30 June 2025 has passed, it’s time to get your tax documents in order. Below is a clear guide to common deductions, updated limits, and important traps to avoid when lodging your individual tax return for FY2025.

Work-Related Deductions

D1 – Car Expenses

• Claim $0.88 per km, up to 5,000 km per year, using the cents per kilometre method.
• No logbook needed, but keep a record of how the travel relates to work.

D2 – Travel Expenses

• Covers work-related overnight travel, including airfares, accommodation, meals, and incidentals.
• Only claim if travel directly relates to your work (e.g. conferences, client visits, remote site work).
• You can’t claim regular travel between home and your usual workplace.
• Keep detailed records, including receipts, a travel diary (if the trip lasts 6 nights or more), the employer's travel policy, and the purpose of the trip.

D3 – Laundry and Dry Cleaning

• Up to $150 per year can be claimed tax-free for eligible work clothing.

D4 – Self-Education

• Fully deductible if the course is directly related to your current job.
• Includes tuition, textbooks, internet, and travel between home and campus.

D5 – Overtime Meal Allowance

• Claim up to $37.65 per meal if you receive an overtime meal allowance under an industrial award.

D5 – Home Office (Fixed Rate Method)

• Claim $0.70 per hour worked from home.
• Covers electricity, internet, mobile use, stationery, and the decline in value of office items.
• Must keep a log of hours worked.

D5 – Union Fees & Subscriptions

• Fully deductible if directly connected to your employment.

D5 – Tools & Equipment

• Items $300 or less: claim in full.
• Over $300: depreciate over the asset’s useful life.

Superannuation Contributions

Concessional (Pre-Tax) Contributions

• Up to $30,000 per year (previously $27,500).
• Unused cap amounts can be carried forward for 5 years if your super balance is under $500,000.

Non-Concessional (After-Tax) Contributions

• Up to $120,000 per year, or $360,000 over 3 years using the bring-forward rule.
• Contributions are only allowed if your total super balance is under $1.9 million.

Charitable Donations – D9

• Donations of $2 or more to registered Deductible Gift Recipients (DGRs) are tax-deductible.
• You must keep official receipts, and the donation must be voluntary.

Tips & Traps for FY2025

✅ Keep Evidence

• Keep receipts, invoices, and work-related logs for 5 years in case of an audit.

✅ Apportion Personal vs Work Use

• Claim only the work-related portion for items like phone, internet, or travel.

✅ No Double Dipping

• If reimbursed by your employer, you cannot claim the expense.

✅ Asset Threshold

• Ensure you apply depreciation rules correctly for tools or equipment with a value exceeding $300.

✅ ATO Watchlist Items

• Common audit areas include motor vehicle claims, work-from-home deductions, and uniform expenses.

New individual tax rates and thresholds for 2024–25

Foreign resident capital gains tax regime

• The CGT withheld rate was increased from 12.5% to 15 % at the start of 2025 for contracts entered into on or after 1st January 2025, and $750,000 property value threshold was deleted.

Common Changes – Applicable to individual(Sole Trader), Company, Partnership & Trust. 

Luxury car tax and Depreciation thresholds:

The following table lists the LCT thresholds for the financial year the car was imported, acquired or sold(this is not car depreciation limit for use in accounts).

Depreciation:

Division 7A – benchmark interest rate

ASIC fees for 2025

General Interest Charges on ATO Liabilities

From 1 July 2025, taxpayers will no longer be able to claim tax deductions for general interest charges (GIC) and shortfall interest charges (SIC). It is recommended that any outstanding amounts be paid by 30 June 2025.

Want help understanding your 2025 Tax Deductions? Book a free consultation or contact us today to get started.