Expert reveals the biggest mistake Aussies can't afford to make at tax time
Aussies who rush to get their tax return in early are making a huge mistake, a peak accountancy group has warned.
As the end of the financial year looms, income earners can claim up to $300 worth of work-related expenses, excluding travel, without the need for receipts.
Manually claiming work expenses is often time consuming and many Aussies are tempted to complete their return as soon as possible on July 1 to get a quick tax refund so there's money in the bank to pay those bills.
But Jenny Wong, the tax lead with CPA Australia - representing Certified Practising Accountants - said those who rushed to fill out their tax return could be missing out on important deductions.
' Cost of living pressures could mean some people are eager to lodge their tax return as quickly as possible to access a refund, but it's important to be patient, gather your evidence and claim everything you are entitled to,' she said.
'Firing the starting pistol on your tax return too quickly means you could end up shooting yourself in the foot. Failing to claim everything you're entitled to means less cash back than you could otherwise get.'
Now is the time to chase up all those receipts to save the hassle later.
'Hopefully your receipts aren't down the back of the couch, but they might be in your emails and phone apps. Or maybe the junk draw?' Ms Wong said.
Travel expenses
Ms Wong said those filing their tax return too early were more likely to miss out on travel expenses incurred on the job.
'Maybe you travelled more for work and were not reimbursed by your employer for meals or other travel essentials,' she said.
While it's possible to make a total claim on tax if the deductions are less than $300, this shortcut doesn't cover travel allowance, meal allowances, or the use of a car.
That means workers whose employer gives them a travel allowance, also known as an award transport payment, can also make a claim if travelling for work still left them out of pocket after a workplace allowance.
'Any out-of-pocket work-related expenses could be tax deductible, but you'll need evidence in case you are asked in an audit. Think about what you've had to purchase for work. Check your bank statements,' Ms Wong said.
Those using their car also need to identify which travel is used for work.
'For vehicle expenses, you must be able to identify and justify the percentage that you are claiming as business use,' Ms Wong said.
'To claim accurately, you will need to use a logbook or diary to show private versus business travel.'
Buying new work tools
Rushing a tax return could also jeopardise the expense of work-related items.
Those working from home can claim the cost of a desk or a chair worth up to $300 in one financial year.
If the item is worth more than $300, the item can be claimed on tax over several years, based on how long it's likely to last for.
The same $300 rules applies to buying tools needed for the job.
'Or maybe you started a new job where you had to buy tools, subscriptions, or pay for training and security clearances, for example,' Ms Wong said.
Australians have until June 30 to buy any essential work items to be able to claim the deduction for the 2024-25 financial year.
Working from home claim
Those working from home can multiply by 70 cents the number of hours they worked from where they lived in 2024-25. This method also requires daily diary keeping.
H&R Block calculated the typical Aussie working from home would claim 1,095 hours over the financial year, adding up to $767.
Or they can alternatively use the actual cost method, based on add up electricity and internet bills.
'Which work-from-home expense type makes most sense for you - fixed rate or actual cost method? If you've been good at keeping records throughout the year, the actual cost method may be more beneficial,' Ms Wong said.
Tell the truth
Those who lied about their work expenses are more likely to face an audit from the Australian Taxation Office.
'Getting your tax return right is your responsibility,' Ms Wong said.
'This means declaring all of your income and claiming the appropriate expenses.
'Failure to properly declare your income increases your chances of being audited by the ATO.'
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