Tax time can be overwhelming for small business owners—but the Australian Taxation Office (ATO) wants to make it easier. Each year, the ATO releases a Tax Time Toolkit, and the 2025 edition is packed with practical advice to help business owners maximise deductions and lodge accurately.
In this article, we break down the key elements of the ATO’s 2025 toolkit and how small businesses in Penrith and Western Sydney can use it to claim every eligible deduction this financial year.
1. What Is the ATO’s Tax Time Toolkit?
The ATO’s Tax Time Toolkit is a free collection of fact sheets, checklists, and guidance tailored to help small businesses prepare for the end of financial year (EOFY).
In 2025, the toolkit includes:
Home-based business expenses
Motor vehicle claims
Depreciating assets and instant asset write-off
Travel deductions
Record-keeping best practices
It’s designed to reduce confusion and help you avoid common mistakes when preparing your tax return or BAS.
💡 Find the toolkit at ato.gov.au.
2. Most Valuable Deductions in the 2025 Toolkit
Here are the key areas where many small businesses can maximise deductions:
✅ Home-Based Business Expenses
If you work from home—part-time or full-time—you may be able to claim:
A portion of internet and electricity
Mobile and landline phone expenses
Office furniture and equipment
Cleaning and maintenance of the work area
💡 You’ll need to keep a diary for 4 weeks to show work-related use.
✅ Motor Vehicle Expenses
There are two main methods:
Cents per kilometre (up to 5,000km)
Logbook method (based on business-use percentage)
Common claims:
Fuel and oil
Registration and insurance
Loan interest and depreciation
Repairs and servicing
💡 If you’re using the logbook method, ensure it’s updated every 5 years.
✅ Depreciating Assets
The toolkit covers rules around:
Depreciation for business assets over $20,000
The instant asset write-off for assets under $20,000 installed by 30 June 2025
Pooling assets for simplified depreciation
💡 Even software subscriptions or upgrades can be depreciated if used for business purposes.
✅ Travel Expenses
Business travel, including overnight trips, is deductible.
Claims may include:
Airfare and accommodation
Car hire and taxi/rideshare fares
Meals (only if overnight and away from home)
Conference or seminar costs
💡 You’ll need written evidence like receipts and travel diaries if away for more than 6 nights.
3. What the Toolkit Says About Record-Keeping
The ATO is clear: No records = no deductions.
Best practices include:
Using digital accounting software like Xero or MYOB
Keeping receipts for at least 5 years
Scanning paper records and saving them to cloud storage
Separating personal and business expenses with dedicated bank accounts
💡 If you don’t have a system yet, ask your Penrith accountant for help setting one up before 30 June.
4. How to Use the Toolkit Effectively
Here’s a simple plan to use the ATO toolkit before tax time:
🔹 Step 1: Download the Toolkit
Visit the ATO’s official site and download the small business version of the 2025 Tax Time Toolkit.
🔹 Step 2: Identify Relevant Fact Sheets
Choose the guides that apply to your business structure, industry, and operations (e.g. home-based business, sole trader, company).
🔹 Step 3: Conduct a Pre-Tax Review
Sit down with your accountant or bookkeeper and:
Review all major purchases and expenses
Ensure all income is recorded
Verify that you have supporting documentation for each claim
🔹 Step 4: Lodge Early or with an Agent
Lodging early ensures faster refunds and gives you time to fix any errors before the ATO gets in touch.
5. Penalties for Incorrect Claims
If you claim something without evidence, the ATO can:
Disallow the deduction
Apply interest and penalties
Flag your business for future review or audit
Being overconfident at tax time can cost far more than hiring a professional to do it properly.
💡 If in doubt, consult a local accountant in Penrith who understands the ATO’s expectations.
Conclusion
The ATO’s 2025 Tax Time Toolkit is one of the most useful resources available for small business owners—yet many don’t know it exists. By using it proactively, you can claim the deductions you’re entitled to while staying fully compliant.
Need help applying the toolkit to your business? Carmody Accounting supports small businesses across Penrith and Western Sydney with accurate, efficient, and strategic tax planning.
