Filing accurate tax returns in Australia is crucial to avoid penalties, audits, and repayment issues. However, many Australians inadvertently make mistakes on their tax returns every year. In fact, the Australian Taxation Office (ATO) receives around 8 million individual tax returns annually, and many of them contain errors.
This article provides a comprehensive guide on the common tax return mistakes in Australia and the best ways to avoid them when you file your 2024 tax return.
Most Common Tax Return Errors
Some of the most frequent tax return mistakes that Australians make include:
1. Forgetting to Report All Income
You must report all your taxable income sources when filing your tax return. This includes:
- Employment income (salaries and wages)
- Investment income (interest, dividends, capital gains)
- Business, partnership, trust and foreign income
- Income from the sharing economy (Uber, Airbnb etc.)
- Australian Government allowances and payments
Failing to include any taxable income can lead to penalties of up to 75% of the omitted amount. The ATO data matching systems can easily identify unreported income sources leading to audits.
2. Incorrect Deduction Claims
You can only claim tax deductions for expenses directly related to earning your assessable income. However, many taxpayers claim deductions they are not eligible for.
Common errors include claiming private expenses, expenses not backed by receipts, expenses related to exempt income, expenses for rental properties you do not own, and self-education expenses with no direct career relevance.
3. Failing to Claim Tax Offsets
There are many tax offsets you may be eligible for to reduce your tax liability. However, forgetting to claim them means losing out on these tax savings.
Some offsets taxpayers often miss out on include:
- Low and middle income tax offset
- Senior Australians pensioner tax offset
- Zone tax offset
- Early stage investor tax offsets
4. Incorrect Personal Information
Providing inaccurate personal details like your name, date of birth, address and tax file number can hold up your tax return. It raises data matching errors with ATO records delaying your assessment and refund.
5. Using the Wrong ABN
If you run a business, you must report all income and claim deductions using the correct ABN linked to that enterprise. Any income earned or expenses incurred under the wrong ABN can trigger compliance activity from the ATO.
How to Amend Tax Returns to Correct Errors
If you realize you’ve made a mistake on your submitted tax return, you need to amend it to avoid penalties. Here is an overview of the tax amendment process:
Online Using MyTax
You can amend your tax return online through the ATO’s MyTax service. It is the easiest and fastest option taking around 2 weeks for reassessment.
Paper Amendment Form
Download the Amendment schedule 2022 form and fill it out. Post it to the ATO along with any supporting documents. This can take 6 to 8 weeks for processing.
Via a Tax Agent
Contact your tax agent and submit the revised information. They will manage the amendment process through their agent portal. Using a tax agent does not impact amendment timeframes.
Time Limits
You have two years from the initial assessment date to amend your personal income tax return. For companies and super funds the limit is four years.
Outcomes
Amending your tax return can lead to:
- Getting a refund: If you paid too much tax
- No refund or amount owing: If the amendment has no dollar impact
- Having to make a payment: If you did not pay enough tax
Tips to Avoid Tax Return Errors
Here are some handy tips to help you get your tax return right the first time:
1. Collect All Income Documents Before Filing
Wait until you receive all your payment summaries from employers and income statements from banks, government agencies and other sources before lodging your tax return. Rushing can cause unreported income issues.
2. Double Check Personal Information
Carefully verify personal details like your name, TFN, bank details, address etc. before submitting your tax return. Cross check data with your passport, driver’s license, bank account and other official documents.
3. Keep Detailed Records for Deductions
Maintain orderly records of documents that prove all your deduction claims like receipts, bank statements, logbooks, contracts etc. Disorganized records often lead to incorrect or fraudulent claims triggering ATO scrutiny.
4. Review Before Hitting Submit
After entering all your income and deduction data, carefully review your entire tax return before submitting it online. Going through each section methodically reduces accidental errors.
5. Get Help from a Tax Expert
If you are unsure about any aspect of your tax return, consult a registered tax agent. Their expertise can help you claim correctly and maximize your deductions.
Key Deadlines for 2024 Tax Returns
Here are the crucial deadlines for filing your 2024 tax return:
- October 31, 2025 – Due date for lodging 2024 tax returns for individuals and sole traders who prepare their own return
- May 15, 2025 – Due date for tax returns lodged through a registered tax agent
Note: An agent can apply for a lodgement deferral to extend individual returns to March 2026. However, income tax still needs to be paid by October 2025.
Conclusion
Avoiding common tax return mistakes takes diligence and care when filing your 2024 return. Following the tips outlined in this article will help minimize errors and ensure faster processing without any refund delays or ATO scrutiny. Collecting all your income statements early, double checking personal details, maintaining thorough deduction records and seeking expert help when unsure are all prudent strategies for error-free tax filing.