Every year, thousands of Australians sit down, open myTax, and lodge their own tax return without a second thought. Most of the time it goes fine. But every tax season, the Australian Taxation Office quietly adjusts hundreds of thousands of returns after the fact, and the reasons behind those adjustments tend to repeat themselves year after year. Below are the ten mistakes I see most often as a tax return accountant, why each one happens, and how to avoid becoming another statistic in the ATO’s data matching reports.
1. Lodging Before Your Pre-Fill Information Is Ready
This is, by a wide margin, the single biggest driver of return amendments. The ATO has stated that taxpayers who lodge before their pre-fill data becomes available are more than twice as likely to have their return amended afterward. Pre-fill information, which includes details reported to the ATO by your employer, bank, and health fund, typically does not fully populate until late July. Lodging in the first week of July, before this data has settled, means you are essentially guessing at figures the ATO will later cross-check automatically.
The fix here is simple even if it is not satisfying. Wait until your income statement is marked as finalised and pre-fill data has populated before you lodge, rather than rushing to be first. A return lodged two weeks later with accurate figures will always beat a rushed return that gets flagged for amendment.
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2. Leaving Out Income You Did Not Think Counted
The ATO’s data matching capability has become considerably more sophisticated, cross-referencing your return against information from banks, employers, share registries, and even cryptocurrency exchanges. Income that gets left off returns most often includes bank interest, dividend payments, side income from platforms like ride share or short-term accommodation, and cash payments for occasional work. None of this income is invisible to the ATO simply because it did not come through a regular payslip.
Why Small Amounts of Unreported Income Still Matter
It is tempting to assume that a small amount of interest or a one-off cash payment is not worth declaring, but the ATO’s systems do not distinguish between a large omission and a small one when it comes to flagging a discrepancy. Even a modest gap between what you declared and what the ATO already knows about can trigger a review, and the administrative hassle of responding to that review often costs more in time and stress than simply declaring the income correctly the first time.
3. Guessing at Deduction Amounts Instead of Using Real Figures
Work-related deductions are one of the most heavily scrutinised areas of individual tax returns, largely because they are also one of the easiest areas to overstate. The ATO compares deduction claims against benchmarks for your occupation and industry, and a claim that sits well outside the typical range for people doing similar work is likely to draw closer attention. Rounding up expenses, claiming a flat percentage without any real basis, or simply estimating based on what seemed reasonable last year are all common habits that create risk.
4. Claiming Deductions Without Any Supporting Documentation
You are generally able to claim up to 300 dollars in work-related expenses without receipts, provided the expenses are genuine and directly related to your work. Beyond that threshold, documentation becomes essential, and this is exactly where many self-lodged returns fall down. People claim amounts they remember spending without having kept the receipt, invoice, or bank statement to back it up. If your return is ever reviewed, a deduction you cannot substantiate is a deduction the ATO can disallow, sometimes with penalties attached if the claim is found to have been made without a reasonable basis.
5. Mishandling Rental Property Deductions
Rental property returns carry their own specific set of traps, and they come up constantly in self-lodged returns. Common errors include claiming deductions for periods when the property was not genuinely available for rent, treating capital improvements as if they were immediately deductible repairs, and claiming capital works deductions without a proper depreciation schedule to support the figures. These are detailed, technical areas of tax law, and a small misunderstanding of the rules can lead to a significant overclaim that the ATO later unwinds.
6. Forgetting About Foreign Income Obligations
If you are an Australian tax resident, you are generally required to declare overseas income, including foreign employment income, pensions, investment returns, and capital gains on assets held outside Australia. This is an area people frequently get wrong, sometimes because they genuinely do not realise the obligation applies to them, and sometimes because they assume income already taxed overseas does not need to be reported again in Australia. The reality is more nuanced, since foreign tax paid may be eligible for an offset, but the income still needs to be declared correctly in the first place.
7. Not Knowing How Private Health Insurance and Government Payments Interact With Your Return
Private health insurance details, government payments such as JobSeeker or family tax benefits, and the Medicare levy surcharge all interact with your tax return in ways that are easy to get wrong without guidance. People sometimes forget to include health insurance statements entirely, or do not realise how their income level affects surcharge thresholds. These errors tend to be less about dishonesty and more about the genuine complexity of how these pieces fit together, which is exactly the kind of thing a second set of eyes tends to catch quickly.
8. Assuming This Year’s Return Will Look Exactly Like Last Year’s
A surprising number of self-lodged errors come from simply copying last year’s approach without checking whether anything has changed. Thresholds shift, work circumstances change, side income starts or stops, and rules around specific deductions are updated from year to year. A return that was accurate twelve months ago is not automatically a safe template for this year, and treating it as one is how outdated assumptions quietly creep into an otherwise careful return.
9. Misreading How Multiple Income Sources Interact
More Australians than ever are juggling more than one source of income in the same financial year, whether that is a primary job alongside freelance work, a side business, or investment income on top of regular employment. Each of these income streams is usually fine to report on its own, but the mistake happens when someone treats each source in isolation rather than understanding how they combine to affect your overall tax position.
A common version of this mistake involves a second job or side income being taxed at a flat rate throughout the year, often leaving someone with a larger than expected tax bill at lodgement time because the combined income actually pushed them into a higher marginal tax bracket than either employer withheld for individually. This is not a mistake in reporting the income itself, since both sources are usually declared correctly, but it is a mistake in failing to anticipate the combined outcome and plan for it, such as by requesting additional withholding from one of the income sources throughout the year.
10. Overlooking Capital Gains Events That Are Easy to Miss
Capital gains tax does not only apply to obvious transactions like selling an investment property or a parcel of shares. It can also apply to events that people do not immediately think of as a sale, such as transferring an asset into a different ownership structure, receiving a payout from the demolition or compulsory acquisition of a property, or disposing of cryptocurrency, including swapping one cryptocurrency for another. Many self-lodged returns miss these events entirely simply because the person did not recognise them as a capital gains tax trigger in the first place.
This is one of the more technical areas of individual tax, and it is also one where the cost of getting it wrong tends to be higher than most other mistakes on this list, simply because capital gains amounts are often larger than a typical work-related deduction. If you have had any change in asset ownership during the year, even one that did not involve receiving cash directly, it is worth specifically checking whether a capital gains event may have occurred.
Why a Tax Return Accountant Catches What Self-Lodging Often Misses
None of the mistakes above are the result of people being careless or dishonest. They happen because individual tax law is genuinely detailed, it changes from year to year, and most people simply do not have the time or background to stay across every rule that might apply to their specific situation. A tax return accountant spends their entire working life staying current with these rules, which means the kind of errors listed above are exactly what they are trained to catch before a return is ever lodged, rather than after the ATO has flagged it.
This is not about distrust of your own judgement. It is simply recognising that tax law is a specialised field, the same way you would not expect to diagnose your own car trouble without a mechanic or interpret your own blood test results without a doctor. A second, trained set of eyes on your return before it goes anywhere near the ATO tends to catch small issues while they are still small, rather than after they have become a letter in your mailbox.
How the ATO Actually Finds These Mistakes
It is worth understanding why self-lodged errors so rarely go unnoticed these days, because this context helps explain why accuracy matters more now than it might have a decade ago. The ATO’s data matching program draws information from an enormous range of sources, including employers, banks, health funds, share registries, cryptocurrency exchanges, state revenue offices, and even ride share and short-term rental platforms. This information is compared automatically against what you report on your return, and any meaningful gap between the two is flagged for closer attention.
This is a very different environment from the one many people assume they are operating in. There is a common belief that small discrepancies will simply slip through unnoticed among millions of returns processed each year, but automated data matching does not work by sampling a handful of returns for manual review. It works by systematically comparing every return against the data the ATO already holds, which means the volume of returns processed each year does not provide the kind of cover people sometimes assume it does.
What Happens If Your Return Gets Flagged
If a discrepancy is identified, the process generally starts with a relatively low-key request for clarification or additional information, rather than an immediate audit. How you respond at this stage matters considerably. Providing clear, accurate information promptly tends to resolve straightforward discrepancies quickly, while a slow or incomplete response can escalate the matter into a more formal review. This is another area where having a tax return accountant involved from the start, or brought in as soon as a query arrives, tends to smooth out what can otherwise become a drawn-out and stressful process.
Building Good Habits for Next Year’s Return
Many of the mistakes covered in this guide are easier to avoid with a bit of groundwork done throughout the year rather than all at once at tax time. Keeping a simple, ongoing record of work-related expenses as they occur, rather than trying to reconstruct a year’s worth of purchases from memory in July, removes much of the guesswork that leads to inflated or unsupported deduction claims. The same applies to any side income or less conventional earnings, where a simple running log throughout the year makes an enormous difference compared with trying to recall every payment months later.
It is also worth building a habit of flagging any changes in your circumstances to whoever helps prepare your return, rather than assuming those changes are obvious or irrelevant. Starting a side business, selling an asset, taking on a second job, or receiving an inheritance are all the kind of events that can meaningfully change your tax position, and the earlier these are raised, the more options exist to handle them correctly and, where legitimate, more tax effectively.
The Real Cost of Getting It Wrong
An amended return is not simply a minor administrative inconvenience. If the ATO determines you have under-declared income or over-claimed deductions, you may be required to repay the difference, along with interest charged on the shortfall from the date it should have been paid. In more serious cases, particularly where a pattern of inflated claims is identified, penalties can apply on top of the repayment itself. Even in straightforward cases, responding to an ATO review takes time, requires you to track down old records, and creates a level of stress that most people would rather avoid entirely.
Getting Your Tax Return Right the First Time
If you live in Byford and would rather avoid the stress of wondering whether your self-lodged return is correct, a tax return accountant can take that uncertainty off your plate entirely. Getting your return right the first time is not just about avoiding ATO attention; it is about making sure you are claiming everything you are genuinely entitled to without accidentally stepping over the line.
Our team has been helping individuals across Perth and Western Australia lodge accurate tax returns for over 30 years. If you would like a second set of eyes on your return this year, get in touch with our team today.
Frequently Asked Questions
- Is it illegal to make a mistake on my tax return if it was not intentional?
An honest mistake is generally treated differently from deliberate misreporting, and the ATO typically allows you to correct an error through an amendment without severe penalty if it was made in good faith. That said, repeated or significant errors can still attract scrutiny, which is why accuracy from the outset matters. - How long does the ATO have to review my tax return after I lodge it?
Generally, the ATO has two years from the date of assessment to review an individual tax return, though this period can be longer in certain circumstances, such as where fraud or deliberate evasion is suspected. - Should I wait to lodge my tax return even if I am owed a refund?
Yes, lodging too early before your pre-fill information is finalised significantly increases the chance your return will need to be amended later, which can actually delay your refund further than if you had simply waited a few extra weeks to lodge accurately. - What happens if I forgot to declare some income from a previous year?
You can request an amendment to a previous year’s tax return to declare income you missed. It is generally better to proactively correct this yourself than to wait for the ATO to identify the discrepancy through its data matching programs. - Can a tax return accountant help even if my tax situation feels simple?
Yes, even straightforward returns can contain errors or missed deductions that are not obvious to someone without tax training. A quick review often picks up on small issues, whether that means catching a mistake before it is lodged or identifying a deduction you did not realise you were entitled to claim.
This article is general information only and does not constitute personalised tax advice. Tax rules and thresholds can change, and individual circumstances vary. Always seek advice from a qualified accountant or registered tax agent before lodging your tax return.
