How to absolutely nail your tax return


Dodgy deductions on your tax return are increasingly likely to get caught by the Australian Taxation Office.

Millions of tax refunds this year will include extra working-from-home deductions, but legal and accounting specialists warn the ATO's eagle eyes are now scanning hundreds of millions of transactions.

Many transactions today are online, so mistakes are more easily spotted.

ATO assistant commissioner Karen Foat said private expenses were not deductible, but that had not stopped people trying to claim for gastric-band surgery, a man paying his wife $1000 a week for housework and deductions for a child's first birthday party.

The ATO's systems compare your tax return with information from employers, banks, government departments and businesses, and it contacts two million people each year about questionable claims. "Penalties can range from 25 per cent to 75 per cent of the tax shortfall, but you have also got to repay the tax plus interest," Ms Foat said.

NDA Law tax specialist Lisa Christo.
NDA Law tax specialist Lisa Christo.


ATO assistant commissioner Karen Foat.
ATO assistant commissioner Karen Foat.

"If we think you have been doing this deliberately and falsifying documents, there can be prosecutions."

NDA Law tax specialist Lisa Christo said the ATO's data analytics matched more than 600 million transactions annually.

"So if you have been trying to avoid tax, the risks of getting caught this year or in the future are significant," she said.

"My advice is if you don't have a tax agent, it is really much better to take your time when completing a tax return.

"You generally need to keep all your tax records for five years."

Chartered accountant and Mr Taxman founder Adrian Raftery said the ATO usually clawed back more than $1bn annually through audit investigations.


Not keeping records - it's the No 1 reason why the ATO rejects tax claims.

Forgetting extra income such as bank interest, freelance work and Airbnb rentals.

Incorrect apportioning of home office expenses between work and private use.

Claiming for travel between home and work.

Choosing easy deduction methods when a bigger refund can be claimed through logbooks.

Doing DIY tax without understanding deductions.

Originally published as How to absolutely nail your tax return