The five tax return mistakes that could get you audited

July 18, 2026 — 5:01am

Tax statements are landing and, especially if you think you’re due a refund, you might be clambering to do your return. But the ATO has a warning: get it right, don’t rush it. And whatever you do, don’t fudge it.

Thanks to unprecedented data matching and heightened focus on catching fake claims, these are the five mistakes likely to flag you for an audit this year.

Mistake 1: Claiming 5000km in mileage without receipts. Recently it’s become common for taxpayers to claim the maximum 5000km mileage without fuel receipts.

The ATO is believed to have sent out half a million emails to Aussie drivers as part of a crackdown where this is not valid. Because here’s the thing: you cannot claim your daily commute to and from work, and you must have records to prove you travelled the work-related kilometres.

Your options are keeping a diary or using the even easier myDeductions tool in the ATO app. 

Have these records for last tax year? Then under the cents-per-kilometre method you simply multiply the number of work-related kilometres travelled by the rate per kilometre.

The deadline for do-it-yourself tax returns is October 1. Do yourself a big financial favour and do it right.

That’s $0.88 last tax year. At the maximum 5000km travelled, it works out as a tax deduction of up to $4400 where legitimate. So be sure to start record-keeping for the current tax year.

Mistake 2: Claiming $300 in deductions without receipts. It’s a myth – a way-too-widespread one – that you can deduct this much without proof.

There has never been ‘free’ or ‘automatic’ money back. Instead, you only need records, not receipts, for work-related expense claims of less than $300. These can be calendar entries or a spreadsheet.

What’s more, the ATO website explains this doesn’t include the specific claims: “car expenses, meal allowance expenses, award transport, payment expenses and travel allowance expenses”. These all need to be itemised.

However, note that from this tax year (as in, next year’s tax return), it’s all different. There is a much larger $1000 automatic deduction available without receipts. But the trap here is that your real deductions may, in fact, be more.

To double-check and ensure you don’t miss out on money back, start collecting this year’s receipts immediately. And for your tax return for last year you’ll need to hunt down any receipts for deductions for the excluded items you may have.

Mistake 3: Double-dipping on work-from-home expenses. There are two options – plain and simple. Under the fixed rate method you can claim $0.70 per hour you worked from home for the year. That covers all additional costs and you don’t need a separate home office or dedicated workspace.

What you do need is a record of the total number of hours you worked from home – a timesheet, roster or diary counts. You also need one record for each of the expenses you incurred, say, one electricity and internet bill.

Or you can use the actual cost method, where you apportion your private versus business housing costs. (And note that the ATO just won a landmark full federal court decision that banned employees from claiming a portion of residential rent because they work from home.)

Indeed, there’s a big problem in claiming stuff that’s not business-/work-related. The overarching test for a legitimate deduction is threefold:

• You have to incur the cost personally and not have been reimbursed.
• The cost must be directly related to earning your income.
• And – you guessed it – have that receipt!

If the expense is a mix between private and work-related, you can claim the work-related portion. There is a comprehensive list of the deductions available for different industries.

And don’t make the mistake – they may be funny but they’re also frequent – of claiming things like work lunches, personal grooming or everyday clothing, childcare, gym membership, weight loss drugs or handbags (unless they’re exclusively for a laptop). And you can forget about your daily coffee – the tax office does not consider it an essential tool for your income!

Mistake 4: Not knowing your private sales rules. Sell things on Facebook Marketplace? You should be right without declaring the income, provided it is not a business you are carrying on, intending to make a profit.

The ATO requires you to report income from side-hustles, including regularly flipping goods for more money. Hobbies are usually exempt, as are ad-hoc sales of household or personal items.

But if there’s a regular pattern of sales, that’s different. Any digital sales platforms will report high-volume seller data to the ATO under heightened reporting rules, so think carefully about whether you need to come clean and declare the income.

What about capital gains tax (CGT) and things that you sell, under the new rules? The criteria for qualification for CGT has not changed – a good has to have been bought for more than $500.

So, a piece of art that’s appreciated in value might well be caught. However, a caravan you’ve enjoyed trips in might not, even if you sell it for more than you paid.

This is because a caravan would qualify as a personal use asset, to which a higher purchase threshold of $10,000 applies, before tax kicks in on any sales profit. From July 1, 2027, CGT will be a flat minimum rate of 30 per cent. There’ll be a flurry of demand for valuers to establish the cost base of many assets on that date.

Mistake 5: Not declaring all gig economy earnings. The data matching on gig economy earnings is now strong. Companies like Uber, Airtasker and Fiverr are squarely on the ATO’s radar.

Gigging is treated as a business or self-employment, and because no tax is withheld by the company themselves, it’s prudent to reserve perhaps 30 per cent of your earnings to cover your end of your tax bill.

Of course, your work-related expenses will come off your earnings, including the relevant portion of vehicle expenses like fuel registration and maintenance when it comes to Uber.

You should know that you will usually require an ABN or Australian business number and be registered for goods and services tax if your gross earnings are $75,000 or more (but Uber and ride-share services are classed as “taxi-travel” and you must be registered for GST regardless).

The deadline for do-it-yourself tax returns is October 1. Do yourself a big financial favour and do it right.

Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at nicolessmartmoney.com. Follow her on Facebook, X and Instagram.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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