'Do away with the shoebox': Four mistakes to avoid when lodging your tax return

The Australian Taxation Office (ATO) has revealed the four most common mistakes people make at tax time.

The ATO's assistant commissioner, Karen Foat said a small amount of over-claiming by a large number of individuals adds up to billions of dollars, meaning that essential community services are missing out.

Incorrect work-related expense claims have been highlighted as one of the key drivers of the $8.7 billion tax gap generated by individuals not in business.

Ms Foat said the four most common mistakes to avoid this tax time were:

1. Lodging before all your prefill data is available or failing to report all your income

"We know from previous years that the early birds who lodge in the first weeks of July are far more likely to make mistakes or submit incomplete data. These mistakes may slow down your return, or result in a debt owing to the ATO if we later need to correct the information," Ms Foat said.

"Our data-matching will help us match what you've earned, whether from a traditional 9-5 job, a casual position or sharing economy income. Failing to declare all your income will result in you ending up with a bill when we later match your data."

2. Claiming the wrong thing

"Many people rely on advice from friends and co-workers on what is an acceptable claim, and the information may not always be accurate," Ms Foat said.

"This sees the ATO rejecting thousands of ineligible claims each year for things like gym memberships, travelling to and from work, conventional clothing and the private portion of phone and internet costs."

To claim a deduction for work-related expenses:

  • You have to have spent the money yourself and not been reimbursed
  • The claim must be directly related to earning your income.
  • You must have a record to prove it.

3. Forgetting to keep receipts

The ATO refuses a large percentage of claims where taxpayers are unable to produce records or receipts when asked.

Even if the value of a claim is below the record-keeping threshold, we may ask you to show how you calculated your claim.

"Do away with the shoebox and try myDeductions in the ATO app instead - it's the easiest way to store your receipts. The deduction details can even be uploaded into your tax return or sent on to your tax agent," said Ms Foat, who reiterated that if the value of a claim is below the record-keeping threshold, the ATO may ask to show how you calculated your claim.

4. Claiming for something they never paid for

"We often see people making claims at the record-keeping limit, thinking that the ATO will never question a claim if we don't require receipts. But you still need to have spent the money yourself and be able to show us how you've worked out your claim," Ms Foat said.

"If you can't explain it, we won't accept it, and we may penalise you for failing to take care when lodging your tax return.

"Exceptions to the record keeping rules are there to make things simpler - they do not allow you to claim an automatic deduction up to the specified amount where the money has not been spent."

  • For assistance on a range of topics, including linking your myGov account to the ATO, accessing your payment summary, and what you can and can't claim visit ato.gov.au.