Millions of Australians preparing to file their tax returns face potential pitfalls, including incorrect claims for deductions, failure to declare all income, and lodging prematurely, according to tax expert Belinda Raso. Raso, a senior accountant at Tax Investing Accounting, highlighted common errors that could lead to significant financial losses.
One frequently encountered issue involves work-from-home expenses. Raso noted that many individuals claim the standard fixed-rate deduction of 70 cents per hour but then also attempt to claim separate costs for internet, mobile phone bills, and stationery. This practice, she explained, constitutes "double dipping" as the fixed rate is intended to cover such incidental costs. Similarly, the Australian Taxation Office (ATO) has flagged individuals claiming the maximum 5,000km vehicle deduction without sufficient work-related travel to justify it, with over 95 percent of logged kilometers often unrelated to employment.
Another area of concern is the treatment of assets valued at over $300. Raso advised that these items, such as computers or tools, must be depreciated over their useful life rather than expensed in full in the year of purchase. This often confuses taxpayers who claim the entire cost upfront.
The classification of family status for Medicare levy surcharge purposes also presents a common problem. Misunderstanding what constitutes a "family" versus "single with no dependents" can lead to incorrect payments or entitlements. Raso pointed out that even individuals in a relationship are classified as a family, and errors in this area can result in the ATO adjusting tax returns if the surcharge was incorrectly avoided, but not if it was overpaid.
Reporting all income sources is critical, as failing to declare even small amounts, such as bank interest as low as $2, can trigger an ATO review. Cryptocurrency is also a growing concern, with Raso emphasizing that while not always visible in standard tax lodgment platforms, crypto event data is directly reported to the ATO by platform providers.
Beyond mistakes, many taxpayers overlook legitimate deductions. Raso reiterated that while the 70 cents per hour work-from-home rate covers many costs, it does not include the mobile phone device itself. Expenses like mobile phone repayments, insurance, or the purchase of the device can be claimed separately. Similarly, computer equipment, monitors, keyboards, and mice are eligible deductions. Raso also noted that subscriptions for AI tools like ChatGPT, if used for work, are often missed but claimable.
Regarding the timing of tax lodgments, Raso cautioned against filing too early. She advised waiting until all necessary information, such as income statements from employers and financial institutions, is finalized and marked as "tax ready." Employers have until July 14 to finalize income statements, with some potentially having extensions until July 31. Bank interest and dividend information is typically available by July 20, but details for work covered by taxable payments annual reporting (TPAR) in industries like construction and cleaning may not be pre-filled until August 28. Raso suggested the end of July as an optimal time to lodge to ensure all information is accurate and complete, particularly given the cost of living pressures that may prompt some to file prematurely.