As the end of the financial year looms, the Australian Taxation Office (ATO) has launched a major campaign to help millions of Australians avoid common and costly tax return errors. With new work-from-home patterns and evolving claim rules, getting your return right is more crucial than ever.
The ATO's Watchlist: Top Red Flags This Tax Season
Assistant Commissioner Rob Thomson has revealed the key areas where taxpayers are most likely to slip up, potentially triggering an ATO review or audit.
"We know people are under financial pressure, but the tax return is not a lottery ticket," Mr Thomson cautioned. "The worst thing you can do is try to rort the system. You're just giving yourself a future headache."
1. The Work-Related Expenses Trap
The ATO is paying particularly close attention to work-related expenses, which remain the largest category of individual tax deductions. The golden rule? You must have actually spent the money yourself, and it must directly relate to earning your income.
"If your employer pays for something or reimburses you, you can't claim it," Mr Thomson emphasised. "And if you use something for both work and private purposes, you can only claim the work-related portion."
2. The Revised Work-From-Home Calculation
Gone are the days of the shortcut 80-cent method. This financial year, taxpayers must use either the revised fixed rate (67 cents per hour) or the actual cost method.
The fixed rate now includes energy expenses, phone usage, internet, and stationery—but requires comprehensive documentation of both hours worked and how you calculated your claims.
3. Rental Property Pitfalls
Property investors beware: the ATO is scrutinising rental claims more than ever. You cannot claim deductions for:
- Immediate repairs on newly purchased properties (these are considered capital improvements)
- Personal use of the property or periods when it wasn't genuinely available for rent
- Entire loan interest amounts if part of the loan was used for personal purposes
Record-Keeping: Your Best Defence
With nearly 90% of tax returns now prepared through tax agents, the ATO reminds taxpayers that you are ultimately responsible for the information in your return, even if someone else prepares it.
"Good records are the key to getting your return right," Mr Thomson advised. "It makes the process smoother, and you'll have the evidence you need if we ask questions."
Key Dates and Getting Help
The tax return deadline for most individuals is October 31st, though those using registered tax agents may have later deadlines.
For those needing assistance, the ATO's website offers comprehensive guides, and their online services through myTax provide step-by-step guidance for straightforward returns.
Remember: when in doubt, the three golden rules apply: you must have spent the money yourself, it must relate to earning your income, and you must have records to prove it.
