TL;DR – What You Need to Know

- The most common mistakes are claiming deductions without records, claiming private expenses as work-related, and forgetting to declare income.
- The ATO receives data from many sources — employers, banks, platforms, and investment providers, so undeclared income is easy to detect.
- Working from home and rental property claims are two of the highest-risk areas right now.
- Keep records throughout the year rather than trying to reconstruct everything in July.
- A correct return is always better than an inflated one. Interest and penalties from amended assessments are rarely worth the risk.

We see hundreds of personal tax returns every year. The same mistakes come up again and again — and most of them aren't the result of deliberate dodging, just misunderstanding the rules.

Here's what we see most often, what the ATO is paying attention to, and how to make sure your return is solid.

Mistake 1: Claiming deductions without records

This is the big one.

The ATO doesn't take your word for it. If you claim a deduction, you need to be able to prove it — that you incurred the expense, that you paid for it, and that it was genuinely work-related. That means receipts/invoices and bank statements.

"I think it was about this much" is not going to hold up in an audit.

The fix: keep records throughout the year. The ATO's myDeductions app, a Google Drive folder, or any receipt scanning tool will do. Don't leave it to July to try to reconstruct everything from memory.

Mistake 2: Claiming private expenses as work-related

Your gym membership, your personal phone plan, your commute to work, your lunch — these are not tax deductions.

We understand it feels like everything that keeps you functioning is somehow work-related. But the test is specific: was the expense directly incurred in producing your income, and was it not private in nature? Both parts need to be satisfied.

The tricky grey areas are things like phones, internet, and home office costs — these do have legitimate work-related portions. But you need to actually calculate the work-related percentage rather than just claiming 100%.

Mistake 3: Forgetting income

The ATO receives data from a huge number of sources — employers, banks, share registries, managed fund administrators, crypto exchanges, gig economy platforms, Airbnb.

Income that people regularly forget to declare:

• Interest earned on savings accounts (especially if it's small)
• Dividends — particularly if they were reinvested and you never saw the cash
• Managed fund distributions (same — often just auto-reinvested)
• Income from Airbnb or short-term rentals
• Uber, Airtasker, or other gig work
• Government payments like JobSeeker, Austudy or parental leave pay

The ATO pre-fills what it knows about. But pre-fill is not always complete — and it's your responsibility to declare all income, not just what appears in myGov.

Mistake 4: Getting the Working from Home claim wrong

Since the COVID-era 80 cent shortcut was retired, the WFH rules have been more specific. Yet a lot of people still estimate their hours or try to claim under the wrong method.

The most common errors:

• Using the 70 cents per hour fixed rate without a complete record of actual hours (the ATO doesn't accept rough estimates)
• Claiming internet, phone and stationery on top of the 70 cent rate (that rate already covers those expenses — you can't double-dip)
• Claiming a dedicated home office under the actual method without the records to support it

See our Working from Home guide for the full breakdown.

Mistake 5: Rental property deductions claimed incorrectly

Rental property errors are a known ATO focus area. The common ones:

• Claiming interest on a loan that's partly for personal purposes (e.g. after refinancing)
• Claiming repairs on a newly purchased property before the first tenant moves in (these aren't immediately deductible)
• Claiming capital improvements (a new bathroom, a deck) as repairs and maintenance
• Claiming 100% of expenses on a holiday property that's also used personally
• Not having a depreciation schedule — and therefore missing legitimate deductions, or overclaiming

See our Rental Property Tax Guide and Airbnb & Holiday Homes guide for more detail.

Mistake 6: Car claims without a logbook or diary

"I drive a lot for work" is not a tax deduction by itself. You need either a diary of work-related kilometres (for the cents per km method) or a proper logbook (for the logbook method).

The most common trap: claiming the maximum 5,000km under the cents per km method without any diary records to back it up. The ATO knows the maximum is 5,000km, and they also know that some people just use that number without keeping a record.

Keep a diary. It doesn't have to be a fancy app — a note in your phone with the date, destination and reason for the trip is enough.

Mistake 7: Not declaring the full capital gain on sold assets

Capital gains on shares, managed funds, investment properties and crypto all need to be declared. The CGT discount (currently 50% for assets held more than 12 months) reduces the taxable amount — but the full gross gain still needs to appear on your return, along with the discount applied.

People also sometimes forget:

• That each crypto-to-crypto swap is a CGT event
• That selling shares acquired through an employee share scheme has its own rules
• That a Dividend Reinvestment Plan creates multiple share parcels, each with their own cost base

Mistake 8: Waiting until the last minute

We understand. Life is busy. But lodging close to the 31 October deadline (or even later if you're using an extended deadline through Growthwise) means less time to gather records, more chance of missing something, and a longer wait for your refund.

There are also fines and penalties from the ATO for late lodgement of returns.

What triggers an ATO audit?

The ATO uses sophisticated data analytics to identify returns that look out of the ordinary. Some things that flag attention:

• Deductions that are high relative to income or occupation norms
• A sudden spike in deductions compared to previous years
• Claims that don't match data the ATO already holds (e.g. your investment income doesn't match what the share registry reported)
• Consistent rental losses over many years with no minimal rental income
• Returns with suspiciously round numbers throughout

Being audited doesn't mean you've done something wrong — the ATO also selects returns at random. But the best position to be in is one where every claim is backed up with great records and every income item is declared.

The simplest advice we can give

Keep records of everything. Declare all your income. Only claim what you genuinely spent for work.

A return that's correct is worth far more than one that's inflated by questionable claims. The interest, penalties and stress that come with an amended assessment are not worth it.

Ready to get it done right? Complete the Growthwise 2026 Tax Return Checklist.

Or if you've got questions first, see our FAQ page.