ATO Tax Return Focus Areas 2026: What's Targeted

General information only. This is not tax or financial advice. Consult a registered tax agent or the ATO before relying on this for your own return.

Every tax time, the ATO names the areas where it expects to find the most errors — and then aims its data-matching and audit activity squarely at them. For your 2025-26 tax return (the one you’re lodging now), the ATO has been direct about where it’s looking: work-related deductions and expenses, and omitted income. Everything else — the WFH crackdown, the rental property ruling, the crypto data-matching, the side-hustle pre-fill — sits underneath those two headline areas.

This isn’t guesswork. It’s drawn from the ATO’s own April 2026 tax-time media release, its updated working-from-home guidance, its new rental property ruling, and its published crypto data-matching protocol. Here’s what each focus area actually means for your return, what records back up your claims, and where people typically go wrong.

The ATO’s two headline focus areas for 2026

In its tax-time announcement, ATO Assistant Commissioner Anita Challen named the two areas the ATO expects the most mistakes in: work-related deductions, and income that doesn’t make it onto the return at all. On deductions, the ATO’s message is blunt — “don’t fall into the trap of thinking if you intentionally claim a little more than you are entitled to, it’ll fly under the radar.” On income, the ask is equally direct: declare all of it, including side hustles, cash jobs, interest and rental income, not just your main job’s payment summary.

The ATO frames every work-related deduction against three conditions it calls the “3 golden rules”:

1. The expense must relate to earning your income.
2. You must have paid for it yourself and not been reimbursed.
3. You must be able to support the claim with a record — a receipt, invoice, or logbook.

Miss any one of the three and the deduction doesn’t stand, regardless of how ordinary the expense looks for your job.

Work-from-home claims

WFH deductions remain the single most common individual claim, and the most common source of overclaiming when hours aren’t actually tracked. For 2025-26 you still have two methods:

• Fixed rate method — 70 cents for every hour actually worked from home, covering electricity, internet, phone use and stationery in the one rate. You still need a record of the hours (a diary, roster, or timesheet — not an estimate at tax time).
• Actual cost method — claim the work-related portion of every individual running expense, backed by receipts and a reasonable basis for the work-use percentage.

The fixed rate hasn’t moved this year — it’s carried at 70c/hour from 2024-25 into 2025-26. What has changed is how closely the ATO checks the hours, not the rate. A round number like “8 hours a day, every workday, all year” without any supporting diary is exactly the shape of claim that gets queried. See our WFH fixed rate vs actual method guide for a full worked comparison, then run your own numbers on the WFH Deductions Calculator.

Omitted income — side hustles, gig work, interest and cash jobs

The ATO’s second focus area is income that simply doesn’t get reported. This has gotten harder to get away with, not easier: under the Sharing Economy Reporting Regime, platforms like Uber, Airbnb, Menulog, Airtasker and Upwork now report your gross earnings to the ATO twice a year, well before you sit down to lodge. If you earned anything through a platform in 2025-26, the ATO already has the figure — the only question is whether your return matches it, and whether you’ve claimed the deductions you’re entitled to against that gross number. Our sharing economy reporting regime guide walks through exactly what gets reported, what doesn’t, and the deduction trap that catches first-year gig earners.

Bank interest, dividends, and rental income face the same expectation: the ATO already receives most of this data from banks and share registries through its own data-matching programs, so a return that’s missing an interest line isn’t a return the ATO reads as complete — it’s a return with a gap it can already see. If you’re not sure whether your total income picture is complete before you lodge, the ATO’s guidance on paying tax on multiple sources of income is worth a read before you submit.

Rental property deductions — new ruling for 2026

Rental property owners have a genuinely new document to know about this year: TR 2026/1, alongside draft PCG 2025/D6 on apportioning rental deductions. Together they tighten how the ATO assesses claims where a property has both income-producing and private-use periods — most relevantly, holiday homes and short-term lets booked through platforms like Airbnb and Stayz.

The practical shift: deductions are now assessed against how the property was actually used and made available across the year, not just against the income it earned. A property that’s rented out heavily with minimal private use sits in the ATO’s lower-risk zone; a property that’s nominally “available to rent” but used privately for much of the year, or priced well above market to discourage bookings, attracts more scrutiny on the deductions claimed against it. Ordinary long-term rentals aren’t the target here — the focus is squarely on short-stay and holiday-home arrangements where the line between “investment” and “lifestyle asset” gets blurry.

If part of your rental expense claim depends on apportioning between income-producing and private use, work through it with the Rental Property Deduction Wizard, which sorts expenses into the correct ATO bucket (immediate, Division 43, Division 40, borrowing costs or CGT cost base) before you lodge. For the full income-and-cashflow picture, run the Investment Property Calculator.

Multiple income sources — capital gains and crypto

The ATO’s “declare everything” message extends to capital gains, and crypto assets specifically get their own dedicated data-matching program. The ATO’s crypto assets data-matching protocol pulls transaction data directly from Australian crypto designated service providers — buys, sells, transfers, and account-holder identity details — and cross-references it against what’s reported on individual tax returns. Every disposal is a potential CGT event, whether it’s selling for AUD, swapping one crypto asset for another, or spending crypto on a purchase — and staking rewards and airdrops usually carry their own separate tax treatment on top of that.

If you traded, staked, or disposed of any crypto asset in 2025-26, run it through the Crypto Tax Calculator before you lodge, and use the Capital Gains Tax Calculator for shares and property disposals. Getting the CGT discount and cost base right up front is far less work than an ATO-prompted amendment after the fact.

Common mistakes that trigger a closer look

• Round-number WFH hours with no diary, roster or calendar behind them.
• Claiming 100% work-use on a phone, laptop, or car that’s obviously also used privately.
• Treating platform gross income as if it were net — and then either under-declaring income or missing the deductions that offset it.
• Missing a bank, dividend or crypto exchange because it feels small enough not to matter — the ATO’s data-matching doesn’t apply a materiality threshold the way a person might.
• Averaging a rental property’s private and rented use instead of apportioning it against the actual weeks it was let versus used privately.
• Assuming a crypto-to-crypto swap isn’t a taxable event because no cash changed hands — it is a disposal for CGT purposes either way.

Records to keep

The ATO’s standard record-keeping period is five years from the date you lodge the return that relies on the record. For this year’s focus areas specifically, that means holding onto:

• A WFH hours diary or equivalent log (roster, timesheet, calendar entries) — not just the total you plan to claim.
• Receipts, invoices or subscription statements for anything claimed under the actual cost method.
• Each sharing-economy or gig platform’s annual tax summary, reconciled against your own bank deposits.
• A day-by-day (or at minimum month-by-month) record of a rental property’s private use versus days genuinely available to rent, plus the listing price history if it’s a short-stay or holiday-home arrangement.
• Full crypto transaction history — including swaps, staking rewards, airdrops and transfers between your own wallets/exchanges — exported from every exchange or wallet you’ve used, not just the one you trade on most.

Run the numbers before you lodge

Getting each focus area right individually is one thing; seeing how they add up to your actual refund or bill is another. Start with the Tax Return Calculator to estimate your overall result, or the Tax Refund Estimator for a refund-focused view that accounts for LITO, the Medicare levy, and HELP repayments alongside your deductions.