Tax tip you must read – or lose thousands

From dodgy deductions to missed refunds, these are the biggest blunders Aussies make at tax time, and how to dodge an ATO disaster.

Maddison Brennan-Mills

less than 2 min read

June 28, 2025 - 6:20AM

news.com.au

Tax time doesn’t have to be stressful. Too many Aussies make costly errors that the ATO watches for every year. From dodgy deductions to missed refunds, here are 20 common mistakes (and expert-backed tips) to help you get your return right, avoid red flags, and maybe even boost your refund. Photo: Supplied

1/41Tax time doesn’t have to be stressful. Too many Aussies make costly errors that the ATO watches for every year. From dodgy deductions to missed refunds, here are 20 common mistakes (and expert-backed tips) to help you get your return right, avoid red flags, and maybe even boost your refund. Photo: Supplied

With more Aussies working hybrid or remote, working from home deductions are booming — but so are mistakes. Many people either mix up methods (like using both the fixed rate and actual cost) or fail to keep the right records to back their claims. According to the ATO, from 2023–24 you can choose the revised fixed rate (67c/hour) or the actual cost method, but you must keep records of hours worked and bills paid. Photo: Supplied

2/41With more Aussies working hybrid or remote, working from home deductions are booming — but so are mistakes. Many people either mix up methods (like using both the fixed rate and actual cost) or fail to keep the right records to back their claims. According to the ATO, from 2023–24 you can choose the revised fixed rate (67c/hour) or the actual cost method, but you must keep records of hours worked and bills paid. Photo: Supplied

3/41The fix: Track your hours from day one and save all bills related to internet, electricity, and phone use. Photo: Supplied

Think you can just claim 5,000km because you “drive a lot for work”? Think again. The ATO knows this trick and watches closely. Many taxpayers default to the cents-per-kilometre method without real evidence, or claim non-work travel like commuting, which is not deductible. To claim correctly, you must either use the logbook method (track 12 weeks of trips), or use the cents-per-km method for up to 5,000km. But, you must be able to show how you calculated it. Photo: Supplied

4/41Think you can just claim 5,000km because you “drive a lot for work”? Think again. The ATO knows this trick and watches closely. Many taxpayers default to the cents-per-kilometre method without real evidence, or claim non-work travel like commuting, which is not deductible. To claim correctly, you must either use the logbook method (track 12 weeks of trips), or use the cents-per-km method for up to 5,000km. But, you must be able to show how you calculated it. Photo: Supplied

5/41The fix: Keep a car diary, only count work-related trips, and avoid estimating based on “memory”. Photo: Supplied

Heard you can claim $300 of work expenses without proof? That’s only half true, and the ATO catches people abusing it every year. Yes, you don’t need receipts for claims under $300 total in certain categories, but that doesn’t mean you can just make them up. You must still show the expense is real, work-related, and reasonably calculated. Photo: Supplied

6/41Heard you can claim $300 of work expenses without proof? That’s only half true, and the ATO catches people abusing it every year. Yes, you don’t need receipts for claims under $300 total in certain categories, but that doesn’t mean you can just make them up. You must still show the expense is real, work-related, and reasonably calculated. Photo: Supplied

The fix: Keep a list or spreadsheet of small purchases (e.g. work pens, office supplies). Even without receipts, dates and descriptions help if questioned. Photo: Supplied

7/41The fix: Keep a list or spreadsheet of small purchases (e.g. work pens, office supplies). Even without receipts, dates and descriptions help if questioned. Photo: Supplied

Unless you’re a tradie, nurse, or someone in a job that requires a uniform or protective gear, your regular work clothes probably aren’t claimable. The ATO only allows deductions for occupation-specific clothing, compulsory uniforms, or protective wear. That means you can’t claim a black suit or activewear, even if you only wear it to work. Photo: Supplied

8/41Unless you’re a tradie, nurse, or someone in a job that requires a uniform or protective gear, your regular work clothes probably aren’t claimable. The ATO only allows deductions for occupation-specific clothing, compulsory uniforms, or protective wear. That means you can’t claim a black suit or activewear, even if you only wear it to work. Photo: Supplied

9/41The fix: Check if your clothes meet the ATO’s definitions. If they don’t include a logo, are available to the public, or aren’t protective, don’t claim them. Photo: Supplied

Many Aussies think the ATO won’t notice unreported dividends, crypto gains, or rent. But thanks to data-matching with banks, exchanges and platforms, the ATO usually knows before you even lodge. Failure to report all income is one of the top triggers for audit and penalties, especially for side hustles and property. Photo: Supplied

10/41Many Aussies think the ATO won’t notice unreported dividends, crypto gains, or rent. But thanks to data-matching with banks, exchanges and platforms, the ATO usually knows before you even lodge. Failure to report all income is one of the top triggers for audit and penalties, especially for side hustles and property. Photo: Supplied

11/41The fix: Always declare investment income, even if it’s small or irregular. Crypto sales, dividends, rent, and interest all count. Photo: Supplied

Buying a new phone and calling it a “work tool” doesn’t fly unless you can prove it. You can only claim the work-related portion of shared-use items and the ATO requires clear evidence. Common mistakes include claiming full phone bills, home internet, or Netflix under “research”. These can all trigger ATO review if unsupported. Photo: Supplied

12/41Buying a new phone and calling it a “work tool” doesn’t fly unless you can prove it. You can only claim the work-related portion of shared-use items and the ATO requires clear evidence. Common mistakes include claiming full phone bills, home internet, or Netflix under “research”. These can all trigger ATO review if unsupported. Photo: Supplied

The fix: Work out your percentage of business use and keep a log (e.g. 70 per cent work, 30 per cent personal). Don’t claim 100 per cent unless it’s 100 per cent used for work. Photo: Supplied

13/41The fix: Work out your percentage of business use and keep a log (e.g. 70 per cent work, 30 per cent personal). Don’t claim 100 per cent unless it’s 100 per cent used for work. Photo: Supplied

Yes, the fee you paid to do last year’s tax return is deductible on this year’s return. But many people forget to include it. This also includes online services like Etax, or registered tax agents — as long as you’re not claiming for managing a business return through a company. Photo: Supplied

14/41Yes, the fee you paid to do last year’s tax return is deductible on this year’s return. But many people forget to include it. This also includes online services like Etax, or registered tax agents — as long as you’re not claiming for managing a business return through a company. Photo: Supplied

15/41The fix: If you paid for your 2023 return from July last year, add that fee under “Cost of managing tax affairs” in your 2024 return. Photo: Supplied

Even if you only made a few hundred dollars on Airtasker, Uber, Etsy or OnlyFans, if you earned money, the ATO wants to know about it. Side income is taxable just like wages. If you’re receiving regular payments, using business tools, or marketing yourself, you’re likely running a business and must declare it. Photo: Supplied

16/41Even if you only made a few hundred dollars on Airtasker, Uber, Etsy or OnlyFans, if you earned money, the ATO wants to know about it. Side income is taxable just like wages. If you’re receiving regular payments, using business tools, or marketing yourself, you’re likely running a business and must declare it. Photo: Supplied

The fix: Track all side earnings, even if it feels “casual”. Save invoices, screenshots, or payment records and declare under the correct section. Photo: Supplied

17/41The fix: Track all side earnings, even if it feels “casual”. Save invoices, screenshots, or payment records and declare under the correct section. Photo: Supplied

Donated to a cause this year? If it’s not to a registered Deductible Gift Recipient (DGR), you can’t claim it, no matter how worthy. The ATO only allows deductions for donations of $2 or more made to endorsed charities. Many Aussies wrongly claim for things like GoFundMe, school raffles, or crowd-funding campaigns and get knocked back. Photo: Supplied

18/41Donated to a cause this year? If it’s not to a registered Deductible Gift Recipient (DGR), you can’t claim it, no matter how worthy. The ATO only allows deductions for donations of $2 or more made to endorsed charities. Many Aussies wrongly claim for things like GoFundMe, school raffles, or crowd-funding campaigns and get knocked back. Photo: Supplied

19/41The fix: Before donating, check if the charity is a DGR. If it is, keep the receipt. If not, it’s not claimable. Photo: Supplied

Daily trips between home and work aren’t deductible — no matter how far you travel. This is a very common error the ATO sees. The only exceptions are if you’re carrying bulky equipment, working across multiple sites, or doing business-related trips (like visiting clients or suppliers). Photo: Supplied

20/41Daily trips between home and work aren’t deductible — no matter how far you travel. This is a very common error the ATO sees. The only exceptions are if you’re carrying bulky equipment, working across multiple sites, or doing business-related trips (like visiting clients or suppliers). Photo: Supplied

21/41The fix: Only claim work travel if it meets the ATO’s criteria. Keep a diary or use an app to log business trips. Photo: Supplied

Crypto is one of the ATO’s biggest focus areas. Many Aussies think their transactions aren’t traceable, but the ATO works with exchanges to collect user data. Even if you didn’t withdraw to AUD, selling, swapping, gifting or converting crypto can trigger a capital gains event. And if you use crypto in business, GST may apply. Photo: Supplied

22/41Crypto is one of the ATO’s biggest focus areas. Many Aussies think their transactions aren’t traceable, but the ATO works with exchanges to collect user data. Even if you didn’t withdraw to AUD, selling, swapping, gifting or converting crypto can trigger a capital gains event. And if you use crypto in business, GST may apply. Photo: Supplied

23/41The fix: Track all your transactions and declare crypto disposals in your return, even if you made a loss. Photo: Supplied

You can’t claim a course just because it improves your skills. It must directly relate to your current job, not future work or a career change. The ATO frequently rejects self-education claims for uni degrees, training, or workshops if there’s no direct connection to your income-producing role. Photo: Supplied

24/41You can’t claim a course just because it improves your skills. It must directly relate to your current job, not future work or a career change. The ATO frequently rejects self-education claims for uni degrees, training, or workshops if there’s no direct connection to your income-producing role. Photo: Supplied

The fix: Only claim if your study maintains or improves skills specifically for your current role and keep proof of how it relates. Photo: Supplied

25/41The fix: Only claim if your study maintains or improves skills specifically for your current role and keep proof of how it relates. Photo: Supplied

ATO prefill is handy, but not foolproof. It pulls info from banks, employers and investment platforms, and mistakes or omissions happen often. Don’t assume it’s 100 per cent right. You’re still legally responsible for the return you lodge, even if something auto-filled is wrong. Photo: Supplied

26/41ATO prefill is handy, but not foolproof. It pulls info from banks, employers and investment platforms, and mistakes or omissions happen often. Don’t assume it’s 100 per cent right. You’re still legally responsible for the return you lodge, even if something auto-filled is wrong. Photo: Supplied

27/41The fix: Always crosscheck your income, interest, dividends and bank details before hitting “submit”. Photo: Supplied

Even if you get your refund, you’re not in the clear. The ATO can review or audit returns up to five years after lodgement, and if you can’t produce receipts, they can reverse your claims. Many Aussies delete emails or toss receipts after getting their refund, but that’s a mistake that could cost thousands later. Photo: Supplied

28/41Even if you get your refund, you’re not in the clear. The ATO can review or audit returns up to five years after lodgement, and if you can’t produce receipts, they can reverse your claims. Many Aussies delete emails or toss receipts after getting their refund, but that’s a mistake that could cost thousands later. Photo: Supplied

The fix: Store all tax records digitally in the cloud or in your myGov inbox. Think: receipts, bank statements, diaries, logbooks and invoices. Photo: Supplied

29/41The fix: Store all tax records digitally in the cloud or in your myGov inbox. Think: receipts, bank statements, diaries, logbooks and invoices. Photo: Supplied

If you’re claiming the full cost of something like a phone, internet bill, or even car fuel, the ATO will expect proof that you use it only for work. Most shared-use expenses need to be apportioned between personal and business use, and the split must be reasonable and evidence-based. Photo: Supplied

30/41If you’re claiming the full cost of something like a phone, internet bill, or even car fuel, the ATO will expect proof that you use it only for work. Most shared-use expenses need to be apportioned between personal and business use, and the split must be reasonable and evidence-based. Photo: Supplied

31/41The fix: Estimate your split with a usage diary (e.g. 60 per cent work, 40 per cent personal) and only claim the work portion. Photo: Supplied

The ATO isn’t just targeting big corporations. Their systems use AI to flag small, unusual or inconsistent claims, and you can be reviewed even with a low income. Random audits and data-matching reviews happen every year. If you’re claiming unusual expenses or outside your industry norms, be prepared. Photo: Supplied

32/41The ATO isn’t just targeting big corporations. Their systems use AI to flag small, unusual or inconsistent claims, and you can be reviewed even with a low income. Random audits and data-matching reviews happen every year. If you’re claiming unusual expenses or outside your industry norms, be prepared. Photo: Supplied

33/41The fix: Claim only what you can justify. And if you’re unsure, check ATO occupation guides or speak to a tax agent. Photo: Supplied

Outdated bank account or postal address? Your refund might be delayed, misdirected, or lost. The ATO issues most refunds electronically, and if your details are incorrect, it can take weeks to sort out, especially during peak season. Photo: Supplied

34/41Outdated bank account or postal address? Your refund might be delayed, misdirected, or lost. The ATO issues most refunds electronically, and if your details are incorrect, it can take weeks to sort out, especially during peak season. Photo: Supplied

35/41The fix: Log in to myGov and double-check your bank details, email and address before lodging your return. Photo: Supplied

Many forget that if you pay fees to a union or registered professional body (like a teaching or medical board), you’re entitled to a deduction. Even small amounts can reduce your taxable income and increase your refund. Photo: Supplied

36/41Many forget that if you pay fees to a union or registered professional body (like a teaching or medical board), you’re entitled to a deduction. Even small amounts can reduce your taxable income and increase your refund. Photo: Supplied

37/41The fix: Dig out those annual invoices or check your pay slips. If the fee relates to your work, you can claim it. Photo: Supplied

If you’re not using a registered tax agent, your deadline is October 31. After that, late lodgers can be hit with $275+ fines, compounding every 28 days. Using a tax agent can extend your lodgement deadline — but only if you’ve registered with them by October 31. Photo: Supplied

38/41If you’re not using a registered tax agent, your deadline is October 31. After that, late lodgers can be hit with $275+ fines, compounding every 28 days. Using a tax agent can extend your lodgement deadline — but only if you’ve registered with them by October 31. Photo: Supplied

39/41The fix: Lodge early, or link with a registered tax agent through myGov before the cut-off. Photo: Supplied

If you have investments, crypto, rental income, multiple jobs or business expenses, it’s easy to make a mistake. But many Aussies still self-lodge without knowing the risks. A tax agent can help maximise your deductions and reduce audit risk, and their fee is deductible next year. Photo: Supplied

40/41If you have investments, crypto, rental income, multiple jobs or business expenses, it’s easy to make a mistake. But many Aussies still self-lodge without knowing the risks. A tax agent can help maximise your deductions and reduce audit risk, and their fee is deductible next year. Photo: Supplied

41/41The fix: If your return goes beyond basic wages, consider getting help. It might save you thousands in the long run. Photo: Supplied

Original URL: https://www.themercury.com.au/business/20-tax-mistakes-aussies-make-each-year/image-gallery/9857673c39d6f037c6243a1dd1dcfc5e

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