Every August, thousands of Australians rush to lodge their tax returns, hoping to receive a refund as quickly as possible.
While it’s understandable to want your refund sooner rather than later, lodging too early or without checking your information carefully can create unnecessary problems. Each year, we see people who need to amend their tax returns because important details were missing, or worse, receive letters from the Australian Taxation Office (ATO) because something wasn’t reported correctly.
The good news is that most of these mistakes are completely avoidable.
Here are some of the most common tax return mistakes we see every August and how you can avoid them.
- Lodging Too Early
One of the biggest mistakes people make is lodging their tax return as soon as the financial year ends.
Although you can technically lodge from 1 July, that doesn’t necessarily mean all of your income information has been reported to the ATO.
Employers, banks, private health insurers, government agencies and investment providers all need time to submit information. If you lodge before everything has been finalised, there’s a greater chance your return will be incomplete.
Waiting a few extra weeks can often save you from having to lodge an amendment later.
- Forgetting Investment Income
Many people remember to include their wages but forget about other sources of income.
Some common examples include:
- Interest earned on savings accounts
- Dividends from shares
- Managed fund distributions
- Rental property income
- Capital gains from selling investments
- Cryptocurrency transactions
Even if you only earned a small amount, it’s important to declare all income. The ATO receives information from many financial institutions and investment platforms, making it much easier to identify missing income than it was in the past.
- Claiming Deductions Without Records
A common misconception is that you can claim deductions simply because you spent the money.
In reality, you generally need to be able to show:
- You paid for the expense yourself.
- The expense directly relates to earning your income.
- You have evidence, such as receipts, invoices or records.
Without appropriate documentation, your deduction may not be allowed if the ATO reviews your return.
Keeping digital copies of receipts throughout the year makes tax time much easier.
- Overclaiming Work-Related Expenses
Everyone wants to maximise their tax refund, but claiming expenses you aren’t entitled to can cause problems.
Some examples include:
- Claiming travel between home and work when it isn’t deductible.
- Claiming clothing that isn’t considered occupation specific or protective.
- Claiming the entire cost of a mobile phone or internet service when it’s also used personally.
- Claiming working from home expenses without appropriate records.
It’s important to remember that just because someone else claims something doesn’t mean you can too.
Every person’s circumstances are different.
- Forgetting Private Health Insurance
Private health insurance information is another area that commonly causes mistakes.
If you had private health insurance during the year, your tax return needs to include information from your health fund.
Most funds report this information directly to the ATO, but if you lodge before it’s available, your return may need to be amended later.
Waiting until all your pre-filled information has been received can help avoid unnecessary delays.
- Not Reporting Government Payments
Many Australians receive government payments at some point during the year.
Depending on the type of payment, it may need to be reported in your tax return.
This could include:
- Centrelink payments
- Paid parental leave
- JobSeeker or Youth Allowance
- Disaster recovery payments (where applicable)
Some payments are taxable, while others are not.
If you’re unsure, it’s always worth checking before lodging.
- Assuming Your Tax Refund Will Be the Same Every Year
One of the most common questions we hear is:
“Why is my refund smaller this year?”
There are many reasons your refund may change, including:
- Changes to your income
- Fewer deductions
- Higher investment income
- HECS or HELP repayments
- Additional tax withheld or not withheld
- Changes to tax legislation
Rather than focusing solely on the size of your refund, it’s more helpful to understand why the result has changed.
A refund doesn’t necessarily mean you’ve paid less tax. In many cases, it simply means you’ve paid too much tax during the year.
- Trying to Do Everything Yourself
Tax legislation changes regularly.
While many straightforward tax returns can be completed online, once you have investments, rental properties, multiple income sources, capital gains or a business, things can become much more complex.
Professional advice can help ensure:
- You’re claiming everything you’re entitled to.
- Your return is accurate.
- You understand your tax position.
- Potential issues are identified before they become costly.
For many people, having confidence that their return has been prepared correctly provides peace of mind that’s well worth it.
A Little Preparation Goes a Long Way
Tax time doesn’t have to be stressful.
Taking the time to gather your records, wait for your information to be finalised and ask questions when you’re unsure can make the process much smoother.
If you’ve had changes to your circumstances during the year, such as buying an investment property, selling shares, starting a business or changing jobs, it’s even more important to ensure your tax return reflects your situation accurately.
Every year is different, and every taxpayer is different too.
Need Help With Your Tax Return?
Whether your tax affairs are straightforward or more complex, our team is here to help.
At PLH Accountants, we take the time to understand your circumstances, explain your tax position in plain English and ensure your return is prepared accurately.
If you’re ready to lodge your tax return or would simply like some advice before you do, contact our friendly team today. We’re here to help you get it right the first time.