Most important tax tips, tricks, and mistakes to know for the EOFY

Tax time is upon us! But what can you claim? What should you claim? And which common mistakes should you avoid when lodging your tax return? 

Let’s break down some strategies for accurately maximising your tax return and becoming tax literate with some help from from tax experts, H&R Block.

Always consult a registered tax professional about filing your tax return.

The Australian Taxation Office  will compare what you claim with other taxpayers in similar situations. If your deductions look suspicious or don’t match previous years, the ATO will probably ask you to rethink your claim – or worst-case scenario, audit you.

“There are strict rules around what you can claim,” explains HR Block director of communications, Mark Chapman. 

“Firstly, you need to have incurred the expense [in your line work] and not been reimbursed; secondly, it must directly relate to the income you earned; and thirdly, you need to be able to prove that you spent the money, so you’ll need an invoice, receipt or some other proof of purchase.”

Ticking these boxes can help build a strong case for your claims. Otherwise, you risk looking like a red flag to the ATO.

Here are 4 red flags to avoid when filing your tax return include:

1. Making unrelated claims. If you deduct expenses that have no connection to what you do for work, have already been reimbursed by your employer or covered by work allowances, or can be used in both your work and private lives (i.e. clothes), you look a little suspect. 
   
2. Changing what you claim from previous years. Making sudden large claims you haven’t in previous years could hint to the ATO you’ve embellished your tax return. Instead, they expect your claims to match other tax-payers from similar backgrounds.
   
3. Not providing receipts. Get in the habit of putting all evidence or substantiation for your claim in one place, like a folder, so you can back up all deductions with proof. 
   
4. Over-reliance on flat rate deductions. Especially if you work from home or use your own vehicle for work-related travel, it’s important to substantiate your expenses with invoices or bills. If you use a flat rate for one deduction, avoid claiming the expense again as a separate cost (i.e. claiming the flat rate for car travel then claiming fuel costs as a separate expense). 

Be wary of tax time myths

There's a long list of things that many people are convinced are deductible but really aren’t and Chapman calls these tax myths.

They include making claims for:

• Childcare
• Business suits and formal wear
• Golf club and gym memberships
• Streaming subscriptions
• Dry cleaning services
• Movie theatre tickets
• Drivers license costs
• Cosmetic surgery

Unless you can prove the cost was incurred by your line of work, necessary to your work, and covered with receipts, you likely can’t claim it. Always consult a tax advisor if you’re not sure.

Simple mistakes can lead to trouble come tax time. Little things like typos, forgetting to tell the ATO you’ve changed addresses, or errors in reporting figures can actually impact your return.

In short, check all numbers, even the pre-filled ones!

Chapman says some people assume that because the pre-filled data (that is salary, interest income and tax deductions) can come from the ATO, it must be right, too. But that’s a dangerous assumption because ultimately the legal burden is on you for any errors.

So make sure everything on your tax return is correct as mistakes can delay payment of your return or potentially lead to an audit.

The Australian government has changed what you can claim when working from home. After 1 July 2022, a change was made so that you can either claim expenses individually or at a flat rate of 67 cents per hour. 

Items covered by this new flat rate include:

• Energy bills
  
• Broadband plans
  
• Mobile plans
• Stationary and computer accessories. 

But always get advice on this and consider whether it’s worth it to claim each item separately or under the fixed rate. 

For example, if you use the flat rate to claim your mobile phone usage when working from home, then you can’t claim it again for all the times you use it in the office.

The ATO says: 

"No matter which method you use, make sure to keep records. This will give you more flexibility to choose the method that gives you the best deduction at tax time depending on your circumstances."

Donating to charity is a common claim to make on tax, but you’ll still have to tick the appropriate boxes.

Namely, you’ll need a receipt for the donation and it needs to be a genuine donation of more than $2 (i.e. you didn’t expect to receive anything in return). According to these rules, raffle tickets and charity dinners are out. Donations to the Red Cross, however, are most likely in. 

Similar rules apply to cash gifts you receive from friends and relatives: the gift needs to be a genuine gift to avoid being subject to tax.

Tax can be complicated! When in doubt, don’t file your tax return alone. 

“A good tax accountant will be able to tell you exactly what you can and can’t claim, minimising the chances of an audit at a later date,” Chapman advises.

“Most people find it far less stressful to simply pass on all their information to a tax accountant like H&R Block and leave it to the accountant to complete their return, safe in the knowledge that the return will be accurate and complete."

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