Doing your own tax return? Watch out for these common mistakes

The number of Australians doing their own tax has been increasing since the introduction of MyTax in 2014.

But while the technology has made lodging simpler, people are making mistakes as their lives "become more complex", says Natalie Peng, a lecturer in accounting at the University of Queensland's School of Business.

With side hustles, working from home, crypto investments, renting out rooms and receiving income through digital platforms or apps, Dr Peng says people are at greater risk of getting it wrong.

And they're often lodging too early, which can result in needing to lodge an amendment and paying interest and fees, says Lisa Greig, registered tax practitioner and lecturer in taxation law at University of Melbourne.

Our experts also have a warning about using AI to complete your tax return.

What the ATO is focusing on this year

The Australian Taxation Office (ATO) is looking at the areas where everyday taxpayers commonly make mistakes, says Dr Peng, including work-related deductions, working-from-home claims, omitted income, rental properties and capital gains.

"The ATO is also paying close attention to income that may not feel like traditional income."

That includes side-hustle income, gig economy work, cash jobs, social platform income and gains from selling assets such as shares or crypto, Dr Peng says.

And she says while the ATO knows a lot about you as a taxpayer, it's your responsibility to get your return right.

"The ATO now receives information from many places: employers, banks, share registries, platforms, property records and crypto exchanges.

"Increasingly, the ATO already has a picture and is checking whether your return matches it."

What about the $1,000 instant tax deduction?

Ms Greig says recent headlines about a new instant tax deduction of up to $1,000 may have people expecting that in this year's return.

But even if the bill is passed, it won't take effect until the 2026-27 financial year.

When is the 'right' time to lodge your return?

The ATO uses information from third parties, including health funds, financial institutions, employers, and government agencies, to partially complete your tax return.

But this pre-fill information can take up until the end of July to get there, and if you rush your return through on July 1, Ms Greig says you may need to lodge an amended return later.

In 2024-25 financial year, the ATO corrected more than 140,000 individual tax returns where discrepancies appeared in employment income, interest, dividends, welfare payments, Medicare levy exemptions and private health insurance.

Dr Peng says early July is a good time to prepare, not necessarily lodge.

Preparation might include checking your myGov access, updating bank details, gathering receipts, downloading income statements and looking through bank transactions.

If you're expecting a tax refund, Ms Greig agrees late July is an ideal time to lodge.

If you're expecting a tax bill, she says you might be better off "lodging just in time", by October 31.

When using a tax agent, you can delay until May 15 the following year, but you must be on their books by October 31.

You can also check if your pre-fill data is available before starting your return.

Work deductions: Three golden rules and common mistakes

When it comes to work deductions, there are "three golden rules", says Ms Greig.

You must have spent the money yourself and not have been reimbursed by your employer

The spending must be directly linked to your income

You need a substantiated receipt as proof.

"The biggest mistake people make is trying to claim something that isn't deductible," Ms Greig says.

Dr Peng says work-from-home expenses are another common problem.

"People need to be careful not to double dip. If they use the fixed rate method, that rate already covers certain running costs, so they cannot then claim those same costs again separately."

Car expenses and clothing are other areas where people "get caught," according to Dr Peng.

"The daily commute from home to work is generally private, even if it feels work-related because you need to get to your job.

"Ordinary black pants, white shirts, sneakers, corporate clothing or 'nice clothes for work' are generally not deductible."

For rental property owners, Dr Peng says common mistakes include claiming the full interest on a loan that has been partly used for private purposes, claiming renovation costs as repairs, or not adjusting deductions when a holiday home is used privately.

"And for investors, one mistake is forgetting that selling shares or crypto can trigger a tax event. It is not only about whether money landed in your bank account. Disposing of an asset can matter."

Can you use AI to help with your return?

AI can be useful for organising, but risky for advising, says Dr Peng.

"I would be very cautious about using AI to decide what you can claim. Tax rules are specific, they change, and they depend heavily on personal circumstances.

She says AI may draw on overseas tax rules, old information and content that does not apply to an Australian tax return.

Email address

Ms Greig says privacy is a concern.

"Do not put private information in there," she says, for example pay slips, tax file numbers and bank statements.

For anything you're unsure about, Elizabeth Morton, senior lecturer at Curtin University's law school, says to check in with the ATO or a tax agent.

"Make sure you rely on a registered tax agent by looking them up on the Tax Practitioners Board Register."

Dr Morton also warns about taking advice from social media.

"Be careful of claims circling around … is that influencer registered as a tax agent?"