Things You’re Doing Wrong At Tax Time

Tax time catches people out more often than it should. We regularly see clients across Mildura and regional Victoria run into delays or tax bills because they rushed to lodge, trusted pre-filled figures, or reused last year’s claims without checking the rules. This guide covers the most common tax time mistakes and how to avoid them before they turn into problems.

Why Small Tax Filing Mistakes Turn Into Big Tax Return Problems

The tax system no longer runs on guesswork. The ATO now relies heavily on data matching. Banks, employers, payment platforms, crypto exchanges, and government agencies all report directly to the ATO. That information gets checked against what you lodge.

If the numbers don’t line up, the system flags it. No phone call. No warning. Just a delay, adjustment, or review.

We often explain it to clients like this:
“If someone else reported it, assume the ATO already knows about it.”

Common consequences we see from small errors include:

• Refunds frozen for manual review
  
• Deductions reduced or removed
  
• Tax debts are raised months later.
  
• Interest is added to the unpaid amounts.
  

And once the ATO loses confidence in a return, future lodgements tend to get more attention. That’s when stress really kicks in.

Underreporting Income Is Still the Fastest Way to Get Flagged

Side income is where many people trip up. Ride-share driving. Food delivery. Weekend freelancing. Short-term rentals. It all counts as income.

We’ve seen this first-hand with locals picking up extra work during peak seasons. A Mildura client drove Uber part-time during vintage season. He assumed the income was “too small to matter.” The platform reported it anyway. His return didn’t. The mismatch triggered an adjustment within weeks.

Commonly missed income sources include:

• Uber, Menulog, DoorDash, Airtasker
  
• Airbnb and short-term stays
  
• Freelance or contract work
  
• Cash jobs are paid outside payroll.
  

Even if tax wasn’t withheld, the income is still assessable.

Investment and Overseas Income People Commonly Forget to Declare

Investment income is another blind spot. Bank interest, dividends, managed funds, and some government payments are all reported to the ATO automatically.

Foreign income causes even more confusion. If you earned income overseas or hold foreign assets, it often still needs to be declared in Australia, even if tax was paid elsewhere. Double tax agreements can reduce the tax, but they don’t remove the reporting requirement.

We regularly see people assume:

• “It was taxed overseas, so it doesn’t count here”
  
• “It’s only an interest, so it’s irrelevant”
  

Neither assumption holds up.

Why Pre-Filled Tax Returns Still Lead to Filing Taxes Incorrectly

Pre-fill helps, but it’s not a safety net. It’s a starting point.

Data can be late, incomplete, or missing altogether. Employers amend payroll reports. Banks update interest figures after July. Platforms report income weeks later.

The legal responsibility still sits with the taxpayer. Not the software. Not the ATO.

A simple rule we share with clients:

• If you earned it, check it
  
• If you received it, confirm it.
  
• If it looks low, question it.

Overclaiming Deductions That Don’t Pass the Common-Sense Test

Deductions are where we see confidence outpace accuracy. Many people assume that if an expense feels work-related, it must be deductible. The ATO takes a tighter view. Every claim has to pass three tests, and failing just one is enough for it to be denied.

We often say to clients, “If you’d still buy it without your job, the ATO probably won’t let you claim it.”

Those rules don’t change year to year, but how closely they’re enforced certainly does.

Work Expenses That Fail the ATO Golden Rules

To claim a work-related expense, all three conditions must apply:

• You must have paid for it yourself
  
• It must directly relate to earning your income
  
• You must have records to prove it.
  

Miss one, and the claim falls through.

Where people slip up is assuming relevance equals entitlement. It doesn’t.

Common problem claims we see:

• Meals during ordinary workdays
  
• Travel between home and work
  
• Courses that improve general skills but aren’t job-specific
  

The ATO sees these as private. End of story.

Clothing, Phones, and Cars: The Most Common Tax Deduction Errors

Clothing claims cause more grief than almost any other deduction. The rule is blunt. You can’t claim everyday clothes, even if your boss insists on them.

Black pants. White shirts. Suits. Closed shoes. All private.

Allowable clothing is limited to:

• Protective wear (steel-cap boots, hi-vis, PPE)
  
  
• Occupation-specific clothing (chef jackets, nursing scrubs)
  
  
• Compulsory uniforms with a logo
  

Phones and vehicles cause similar issues. Claiming 100% work use is rare and usually indefensible.

A common scenario we see:
A tradie claims his entire mobile plan. When asked for usage records, it turns out half the data is streaming footy and social media. The ATO trims the claim back hard.

The fix is simple:

• Apportion usage
  
• Keep a reasonable basis.
  
• Be able to explain it without squirming
  

The AUD 300 Rule That People Get Wrong Every Year

The AUD 300 rule is one of the most misunderstood parts of the tax system.

Yes, you can claim up to AUD 300 in work-related expenses without receipts.
No, you cannot make the number up.

You still need to:

• Have actually spent the money
  
• Show how you calculated the total
  
• Explain why the expenses relate to work
  

We’ve seen people claim AUD 300 year after year with no variation. That pattern alone attracts attention.

A safer approach:

• Claim what you genuinely spent
  
• Use bank statements if receipts are missing
  
• Avoid round numbers unless they’re real
  

Deduction Reality Check Before Lodging

Run each claim through this filter:

• Would I still have bought this without my job?
  
• Can I explain the work use clearly?
  
• Do I have something to back it up?
  

If the answer is “no” to any of the above, rethink the claim.

Working From Home Claims That Raise Red Flags

Working from home is now normal across Australia, but WFH deductions remain one of the ATO’s favourite review areas. The rules tightened after COVID, and many people are still applying old logic to new methods.

We see this every July. Someone claims what they did last year, assumes it’s fine, and only finds out later that the method changed or the records don’t stack up.

Choosing the Wrong WFH Method and Locking Yourself Out of Claims

For employees, there are two ways to claim working from home expenses. You must pick one. Mixing them is not allowed.

1. Fixed Rate Method
   For the 2024–25 tax year, the rate is 70 cents per hour.

This covers:

• Electricity and gas
  
• Internet
  
• Phone use
  
• Stationery
  

You need a record of hours worked from home. That can be a diary, roster, or timesheet.

2. Actual Cost Method
   This allows you to claim a portion of:

• Electricity
  
• Internet and phone
  
• Depreciation on equipment
  

It requires detailed records and calculations.

Most employees are better off using the fixed rate method. It’s simpler and harder to get wrong. Where people slip up is choosing a method without checking which one suits their situation.

Double Dipping on Internet and Power Bills

This is one of the quickest ways to undo a WFH claim.

If you use the fixed rate method, you cannot separately claim:

• Internet bills
  
• Mobile phone plans
  
• Electricity or gas
  

They are already built into the hourly rate.

We regularly see returns where both appear. That’s an automatic adjustment.

Think of it like this:
You can’t eat the cake and keep it too.

Home Office Costs You Can’t Claim (Even If You’re There All Day)

Some costs feel work-related but aren’t deductible for employees.

These include:

• Coffee, tea, milk, snacks
  
• Rent or mortgage interest
  
• Council rates
  
• Home insurance
  

Unless you’re running a business from home and meet strict criteria, these remain private.

We’ve had clients argue that their spare room is “basically an office now.” The ATO doesn’t accept “basically.”

Rental Property Errors That Catch Even Experienced Investors

Rental properties attract close attention from the ATO. In our experience, this is where confident taxpayers get caught most often. The ATO’s own data shows that the majority of rental property owners make at least one error each year, usually without realising it.

We see this regularly with regional investors. A property in Mildura might be vacant between tenants or used for a family stay over summer. The intention feels harmless. The tax treatment isn’t.

Repairs vs Improvements: The Difference That Costs Thousands

This distinction matters more than almost anything else in rental property tax.

Repairs restore something to its original condition. These are generally deductible straight away.
Improvements replace or upgrade an asset. These must be depreciated over time.

Examples help clarify this:

• Replacing a few damaged roof tiles after a storm → repair
  
• Replacing the entire roof → improvement
  
• Fixing a broken window → repair
  
• Installing double glazing throughout → improvement
  

A common mistake is claiming large renovations as repairs. Kitchens, bathrooms, extensions, and structural upgrades almost always fall into the improvement category.

We’ve seen clients lose deductions running into five figures by getting this wrong.

Refinancing Loans and Claiming Interest You’re Not Entitled To

Interest is only deductible if the loan relates directly to producing rental income.

Problems arise when loans are refinanced, and the extra funds are used privately.

A typical scenario:

• Original loan: AUD 400,000 for the rental property
  
• Refinance to AUD 500,000
  
• Extra AUD 100,000 used for a car and a holiday
  

Only the interest on the original AUD 400,000 is deductible. The private portion must be excluded.

The ATO expects:

• Clear loan statements
  
• Correct apportionment
  
• Consistent treatment year to year
  

Mixing private and investment use is where things unravel fast.

Claiming Deductions When the Property Wasn’t Really for Rent

You can only claim rental deductions for periods when the property was genuinely available for rent.

This means:

• Market rent
  
• Advertised publicly
  
• No unreasonable conditions
  

You must exclude time when:

• The property was used for personal holidays
  
• It was left vacant but not advertised.
  
• It was offered at well above market rates.
  

We often see this issue with river properties used by families during the peak summer months. The lifestyle benefit is real. The deduction isn’t.

Basic Administrative Blunders That Freeze Refunds

Not every tax return problem comes from complex rules. Some of the most frustrating delays we see come down to simple admin errors. One wrong digit. An old bank account. A box ticked without thinking.

These mistakes don’t usually lead to penalties, but they do stop refunds in their tracks. And once a return is pulled for manual review, timing goes out the window.

Identity Details That Must Match Exactly

Your tax return is matched against multiple systems. If details don’t line up, the return stalls.

Common issues include:

• A Tax File Number entered incorrectly
  
• A name that doesn’t match ATO records
  
• Using a nickname instead of a legal name
  

We’ve seen refunds delayed for months over a single digit typed incorrectly. It’s a painful way to learn the value of double-checking.

A practical habit we recommend:

• Compare last year’s lodged return to this year’s details
  
• Don’t assume autofill got it right.
  

Bank and Address Details That Delay Refunds

The ATO no longer sends refund cheques as a backup option. If your bank details are wrong, the refund doesn’t move.

This often affects:

• People who changed banks during the year
  
• Couples using joint accounts that were closed
  
• Clients who moved house and missed ATO updates
  

We’ve had clients swear their refund was “late,” only to discover it bounced due to outdated bank details.

Choosing the Wrong Tax Filing Status

While Australia doesn’t use the same filing status system as the US, we still see errors around offsets, rebates, and dependency claims.

Common issues include:

• Incorrect spouse income details
  
• Claiming offsets without eligibility
  
• Not updating marital or dependent status
  

These errors often lead to partial adjustments rather than full rejections, which can be harder to spot.

Practical Tax Filing Advice That Actually Reduces Risk

By the time most problems show up, the return is already lodged. Fixing mistakes after the fact is slower, more stressful, and often more expensive. The goal is to get it right the first time.

What follows isn’t theory. It’s what we apply every day when reviewing returns before they go anywhere near the ATO.

Simple Tax Season Tips That Prevent Overpaying Taxes

These habits catch most errors before they matter:

• Match income to documents
  Payslips, income statements, bank interest, and platform summaries should all align. If one is missing, stop and investigate.
  
• Claim what you can prove, not what you hope.
  Strong claims beat large claims. The ATO adjusts weak deductions without hesitation.
  
• Avoid round numbers unless they’re real
  Repeated AUD 300 or AUD 1,000 claims look manufactured.
  
• Read every section before hitting submit
  . Many errors sit in auto-filled boxes that no one checks.
  
• Keep a copy of what you lodged.
  You’ll need it if questions come later.
  

When a Registered Tax Agent Saves More Than They Cost

Not every return needs professional help. Some absolutely do.

You should consider using a registered tax agent if you have:

• Rental properties
  
• Crypto or share trading
  
• Multiple income streams
  
• A business or ABN income
  
• Overseas income or assets
  

We regularly see clients come to us after lodging on their own. By the time adjustments are made, the cost of fixing mistakes far exceeds what proper advice would have cost upfront.

One thing many people overlook: tax agent fees are tax-deductible.

That alone reduces the real cost.

A Mildura Example We See Each Year

A local contractor lodges on his own. He misses depreciation on tools and overclaims motor vehicle use. The ATO adjusts both. He ends up owing money and interest.

The following year, we restructured the claims properly. Same income. Different outcome.

That’s not clever planning. That’s getting the basics right.

Most tax time problems come from small mistakes made in a rush. Missed income, weak deductions, and poor records cause more trouble than aggressive claims ever do.

From what we see across Mildura and regional Victoria, the smoothest returns come from slowing down, checking the numbers, and keeping clear records. Get the basics right, and you reduce the risk of delays, audits, and overpaid tax.