Tax hacks, half-truths and what the ATO’s watching

Scrolling social media for a quick tax win? You're not alone, but you may be heading for trouble.

With the end of the financial year approaching, the ATO has issued a clear warning: incorrect claims are firmly on its radar this tax time, and it has outlined the key areas it’ll be watching when returns start landing.

The misinformation problem

The ATO is urging the community to be wary of incorrect or misleading information, particularly claims promising bigger refunds, shortcuts, or hacks. A lot of the bad advice doing the rounds is coming from third-party sources:

• AI tools

• Social media "finfluencers"

• Well-meaning family and friends, who may unintentionally pass on information that simply doesn't apply to your circumstances

ATO Assistant Commissioner Anita Challen has cautioned taxpayers to be especially careful with information drawn from AI platforms, noting, "AI can be helpful, but it often draws from a broad and inconsistent range of sources, which can lead to inaccurate advice."

The key is, you remain responsible for what's on your return. Taxpayers are accountable for ensuring the information they or their agents give the ATO is accurate, regardless of whether it came from a mate, a website, or a chatbot. Penalties and interest can apply where claims can't be substantiated.

Focus area 1: work-related expenses

Overclaimed work-related deductions are once again under the microscope. As Ms Challen put it, "don't fall into the trap of thinking if you intentionally claim a little more than you are entitled to, it'll fly under the radar and that the ATO won't notice."

Every work-related claim must meet three tests:

1. The expense must directly relate to earning your income

2. You must have paid for it yourself and not been reimbursed

3. You must have a record, such as a receipt, invoice, or logbook, to back it up

If you work from home, the fixed rate method lets you claim 70 cents for every hour worked from home, which already covers running costs such as internet, phone usage, electricity, and stationery. A common mistake is "double-dipping" – using the fixed rate and then separately claiming items it already includes. Keeping a clear record of your hours worked from home throughout the year will make this far easier to substantiate.

Ms Challen has indicated that taxpayers who think they've overclaimed in previous years should lodge an amendment, or speak to their tax professional about amending prior year claims before the ATO comes knocking.

Focus area 2: omitted income

The ATO is also reminding taxpayers to declare all sources of income on their return, including:

• Side-hustles

• Cash jobs

• Interest

• Rental income

With extensive data matching now in place across banks, sharing economy platforms, and property managers, undeclared income is far more visible to the ATO than many people realise.

The flip side is that legitimate deductions are often broader than expected. The ATO's occupation and industry specific guides – or a quick chat with a registered tax professional – can help you identify everything you're properly entitled to claim.

Speak to us before you lodge

A dodgy tip from TikTok or an AI chatbot can quickly turn into an ATO review, an amended assessment, or worse.

Before you lodge this year, please contact our office. We'll help you claim everything you're properly entitled to, and keep you well clear of the ATO's compliance radar.