Sometimes when you start working on your tax return it’s natural to assume that the rates for expenses you can claim will be the same as last year. Unless you’re working in tax every day, it’s easy to miss changes that the ATO has sometimes helpfully introduced! So, what’s new?
Working From Home Expenses
The ATO’s fixed rate for working from home (WFH) deductions has increased from 67 cents to 70 cents per hour for the 2024–25 income year.
To use this method:
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You must be working from home to fulfil your employment duties (not just checking emails).
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You must incur additional running costs such as electricity, internet, or stationery.
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You need to keep records (timesheets or diaries) of your hours worked from home.
The 70¢ rate covers expenses such as:
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Electricity, gas, and internet
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Mobile and landline use for work
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Office consumables like paper and ink
Increase in cents per kilometre
For work-related car expenses, the cents per kilometre rate has also increased from last tax year’s 85 cents per kilometre to 88 cents per kilometre in 2024–2025, for a maximum of 5,000 work-related kilometres per car. The alternative to this cents per kilometre method for calculating deductions for car expenses is the logbook, in which you record work-related trips for a continuous period of at least 12 weeks and keep a record (receipts etc) of your car expenses.
EV home charging rate
For those who own and use a plug-in hybrid electric vehicle (PHEV) (not electric motorcycles or electric scooters) the EV home charging rate of 4.2 cents per kilometre was helpfully introduced on 1 July 2024. You can use this rate to calculate the cost of charging your PHEV at home if you use your PHEV for earning assessable income, you incur power expenses charging your PHEV at home (not a commercial charging station) and you keep records of these expenses.
Exemption from Medicare levy for lump sum payment in arrears
A lump sum payment in arrears (LSPIA) refers to a single payment that covers income you should have received over multiple income years, but received late. If you meet certain eligibility requirements, your LSPIA amount may be exempted when the ATO calculates your Medicare levy liability. This provision was introduced on 1 July 2024 and ensures that no Medicare levy applies to the eligible lump sum. The ATO will work out whether you’re eligible for this exemption and the LSPIA tax offset. A non-final withholding obligation is imposed where taxable Australian real property is acquired from a foreign resident. The withholding obligation is placed on the purchaser – part of the purchase price is paid to the seller and part of it is paid to the ATO as withholding tax. All property contracts signed on or after 1 January 2025, including for the sale of a home, vacant land, mining rights or a lease, are subject to the increased 15% foreign resident capital gains withholding tax (up from 12.5%). The threshold applying to property valued at $750,000 or more was also removed as part of this new policy. Australian residents who are property sellers need to provide a “clearance certificate” to the purchaser to be exempt from this tax. If you are an Australian who sold real property in 2024–2025, and you didn’t obtain a clearance certificate, you can claim the amount that was withheld by the purchaser in your tax return. For foreign residents who sold Australian real property, when lodging your Australian tax return this withholding is credited against your calculated tax liability. You might get a refund if other deductions apply, or owe more tax if you have additional income. It’s important to be across the good and the bad when you’re filing your tax return – not to miss out on the benefits offered by the ATO or to be penalised for incomplete or incorrect claims.
