What’s New for Individuals: Key Tax Changes for 2024–25

Tax law in Australia evolves each year, and the 2024–25 income year brings several important updates that could affect your deductions, liabilities, and claims. Here’s a concise roundup of the headline changes you need to know before preparing your tax return.

Work-from-Home Fixed Rate Rises to 70c/hr

The ATO’s fixed-rate shortcut for home‐office expenses has increased from 67c to 70c per hour for 2024–25.

• What it covers: electricity, internet and phone costs, stationery, depreciation of home‐office furniture.
• Record-keeping: Simply log your hours. No need to separately document each expense, provided you work from home in the course of earning assessable income.
• When it’s best: If you find itemizing every cost onerous or your actual expenses are close to the flat rate.

Tip: If your actual home-office costs exceed the equivalent of 70c/hr, consider using the actual-cost method instead—but keep detailed receipts.

Cents-per-Kilometre Rate Up to 88c/km

For work-related vehicle travel, the cents-per-kilometre (CPK) method rate has risen to 88 cents per kilometre (up from 78c).

• Claim limit: Up to 5,000 business kilometres per vehicle per year without a logbook.
• Record-keeping: Keep a record of kilometres travelled (e.g., diary, odometer readings).
• Alternative: If you travel more than 5,000 km or have higher vehicle expenses, you may benefit from the logbook method (requiring a 12-week logbook and itemized expenses).

EV Home-Charging Rate Introduced for PHEVs

From 1 July 2024, owners of plug-in hybrid electric vehicles (PHEVs) can use a flat 4.2c per km rate to calculate home-charging costs:

• Eligibility: You must use your PHEV for income-earning activities, incur home-charging electricity costs, keep relevant records, and be claiming under the logbook or actual-cost method.
• What it replaces: If you adopt the 4.2c/km EV rate, you cannot separately claim commercial charging station costs.
• Zero-emission EVs: Fully electric vehicles continue to qualify for this rate, subject to the same record and usage requirements.

Note: This rate does not apply to electric motorcycles or scooters.

Lump-Sum Payment in Arrears (LSPIA) & Medicare Levy

Starting 1 July 2024, eligible lump-sum payments in arrears (LSPIAs) will be excluded from the Medicare levy calculation:

• Benefit: No additional Medicare levy on qualifying LSPIAs.
• Eligibility assessment: The ATO will use your current and prior-year returns to determine eligibility.
• Additional offsets: You may also qualify for lump-sum payment in arrears tax offsets.

Foreign Resident CGT Withholding Rate & Threshold

From 1 January 2025, the withholding rate for foreign residents selling taxable Australian real property increases to 15%, and the old $750,000 threshold no longer applies:

• Applies to: All vendors of residential, commercial, vacant land, mining/quarrying rights, leases, and indirect property interests.
• Avoiding withholding:
  • Australian residents must supply a clearance certificate to the purchaser.
  • Foreign residents can provide a variation notice to reduce withholding.
• Reclaiming: If you’re an Australian resident without a clearance certificate, you can claim the withheld amount when you lodge your return.

Tax Help Program Income Threshold Rises to $70k

The ATO’s free Tax Help service now assists individuals with income up to $70,000 (up from $60,000) who have simple tax affairs:

• When available: July through October each year.
• Services: Lodgment of simple returns via myTax, non-lodgment advice, amendments, franking-credit refunds, and myGov assistance.
• How to access: Contact your local community centre for ATO-trained volunteer appointments.

Holding Power for Cheque-Based Refunds

A new discretionary rule allows the ATO to retain certain refunds or credits for up to 90 days:

• Trigger: If you haven’t provided valid Australian financial institution details, the refund may be held.
• Avoid delays: Ensure your banking details are accurate and up to date on your tax return.
• Notification: The ATO will advise via letter, email, or myGov message if they hold your refund.

Proposed $1,000 Instant Tax Deduction (From 2026–27)

As part of recent policy proposals (not yet law), from 2026–27 taxpayers may be able to claim an instant $1,000 deduction for work-related expenses.

• Current status: Still pending legislation; not available for the 2024–25 return.
• Keep an eye on: Future Budget announcements and ATO guidance for implementation details.

Build-to-Rent Development Incentives

Owners and investors in approved large-scale build-to-rent projects can access:

• Accelerated capital works deductions at 4% per annum.
• A concessional 15% final withholding tax on distributions related to rental income and capital gains.

• Eligibility: Must invest in qualifying build-to-rent developments—usually institutional or large private projects.

Preparing Your Return

1. Choose the right method for work-from-home and vehicle claims (fixed rate vs. actual-cost/logbook).
2. Review your vehicle type—you may now benefit from the EV home-charging rate.
3. Update your banking details to avoid refund delays.
4. Check eligibility for lump-sum exemptions, tax-help assistance, and capital works incentives.
5. Stay informed about the proposed $1,000 instant deduction for future years.

For detailed guidance on record-keeping and specific claim requirements, refer to the relevant ATO pages linked throughout. With these key changes in mind, you’ll be well-prepared to maximize your deductions and minimize surprises when lodging your 2024–25 tax return.