Australians warned on tax return mistakes as ATO data checks tighten

Australians preparing to lodge their 2025-26 tax returns are being urged to slow down, check pre-filled information and avoid common deduction mistakes as more people do their own tax online. The immediate risk is simple: rushed or incorrect returns can trigger amendments, delays, interest, fees or penalties.

The Full Story

The number of Australians doing their own tax has increased since MyTax was introduced in 2014, according to the ABC report on common tax mistakes. Online lodging has made the process easier, but tax specialists say everyday returns are getting trickier because people now often have side hustles, work-from-home costs, crypto investments, rental income or payments through digital platforms.

Natalie Peng, a lecturer in accounting at the University of Queensland's School of Business, said the ATO is focusing on areas where taxpayers commonly get things wrong: work-related deductions, working-from-home claims, omitted income, rental properties and capital gains. That matters because a person may think of app income, cash work or social platform earnings as casual money, while the tax system may still treat it as income that needs to be reported.

Timing is another trap. The ATO receives information from employers, banks, health funds, government agencies and other third parties, but that pre-fill data can take until the end of July to appear. Lisa Greig, a registered tax practitioner and lecturer in taxation law at the University of Melbourne, warned that lodging on July 1 can mean fixing the return later.

The same warning appears in tax-time guidance from The Canberra Times, which separates preparing early from lodging early. The practical takeaway is not to ignore tax until October, but to gather receipts, check myGov access, update bank details and wait until income information is complete before hitting submit.

Central Figures

Dr Peng is central to the warning because she explains how modern income streams have made personal tax returns more complex. She said the ATO already receives information from many sources and checks whether a return matches what it has on file.

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

Ms Greig's advice is more hands-on: she identifies the common deduction rules taxpayers need to follow. Elizabeth Morton, a senior lecturer at Curtin University's law school, adds a consumer-protection angle by urging people to rely on the ATO or registered tax agents rather than social media claims.

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

The Data

The numbers show why the ATO is warning people. In the 2024-25 financial year, the ATO corrected more than 140,000 individual tax returns where discrepancies appeared in areas including employment income, interest, dividends, welfare payments, Medicare levy exemptions and private health insurance.

Another published tax-time column reported that 595,000 lodgments in 2024-25 needed adjustment after data matching picked up issues such as over-claimed deductions or missing income. The same report said common claims last year included car expenses worth $11.9 billion across 3.9 million individuals, travel expenses worth $2.7 billion, clothing claims worth $2.4 billion and self-education claims worth $1.9 billion.

Deadlines also carry real costs. People lodging their own return generally face an October 31 deadline, while those using a registered tax agent can delay until May 15 the following year if they are on the agent's books by October 31. The SMH report said late lodgment fines start at $330 and can rise to $1,650, with General Interest Charges listed at 11.43 per cent and compounding daily.

What This Means

For Australian households under cost-of-living pressure, the temptation to lodge quickly is understandable. A refund can help with bills, rent or school costs, but a return lodged before the ATO has complete information may create more admin than it solves.

The biggest pressure point is that tax returns now cover more than wages. Renting out a room, selling shares or crypto, earning through a platform, using a car for work or claiming home office costs can all change what must be reported or substantiated. That is why the old habit of copying last year's claims can be risky.

AI adds a fresh complication. Dr Peng said AI may help organise information, but she warned against using it to decide what can be claimed because tax rules depend on Australian law and personal circumstances. Ms Greig also raised privacy concerns, warning people not to enter private information such as pay slips, tax file numbers or bank statements into AI tools.

What to Expect

Taxpayers can start preparing from July 1, but several sources advise waiting until income statements and pre-fill details are available before lodging. Late July is described as an ideal time to lodge for people expecting a refund, while people expecting a bill may choose to lodge closer to October 31.

The proposed instant tax deduction of up to $1,000 is not available for this year's return. Ms Greig said that even if the bill passes, it will not take effect until the 2026-27 financial year, so taxpayers should not build their current return around that claim.