Filing your tax return can feel like walking through a minefield, but don’t worry—we’re here to help you avoid the most common mistakes. Every year, taxpayers unknowingly stumble into these traps, and while we often catch these errors before the ATO does, it’s best to dodge them altogether. Let’s break down the top tax trip hazards for 2025 and how you can steer clear of them.
1. Missing or Incorrect Information
This is one of the biggest culprits when it comes to tax return headaches. Even small errors, like entering the wrong bank account details, can delay your refund – so double check!
- Bank Details: Double-check your bank account info before hitting submit. A mistake here can mean delays or, worse, no refund at all!
- Partner Income and Relationship Days: If you’re in a relationship, you need to report your partner’s income and accurately note how many days you were together during the financial year. This affects rebates, offsets, and entitlements.
- Private Health Insurance Details: Most of this info is pre-filled and will come through automatically from the ATO, but it’s still up to you to confirm it and enter the correct rebate code. Double-check that your health fund has sent everything to the ATO to avoid any hiccups.
2. Getting Your Residency Status Wrong
Your residency status determines your tax obligations in Australia. For most individuals living and working in Australia, this is straightforward – If you have an Aussie passport and live in Australia– you are an Australian for tax purposes. However, complexities arise for those without an Australian passport or who spend part of the year overseas. For example, even if you’re a non-resident, income earned in Australia is taxable. Misclassifying your residency status can lead to incorrect calculations or penalties.
Not sure about your status? Check out the ATO’s residency tests or get in touch with the One Click Life team for help.
3. Forgetting to Declare All Your Income
This is a big one! It’s easy to overlook some types of income, but the ATO won’t miss them. Many people forget to include income from less obvious sources, such as:
- Interest from Bank Accounts: Even small amounts need to be declared.
- Government Payments: Payments like JobSeeker or Centrelink allowances are taxable.
- ABN Income from Other Work: Whether it’s DoorDash, Uber, HiPages or similar work, all income counts. Be sure to include every dollar to avoid penalties.
Tip: Using One Click Life SAM (Simple Accounting Manager) can help! Instead of digging through endless receipts and bank statements, SAM establishes a secure connection with your bank account, knows what deductions to look for and finds them for you so you can find & add them to your lodgement straight away.
4. Skipping Capital Gains or Losses
If you’ve sold shares, an investment property, or even cryptocurrency, you need to report the gains or losses.
- Capital Gains: Sold something for a profit? You’ll owe tax on the gain.
- Capital Losses: Took a hit? You can offset losses against gains or carry them forward to future years.
Keep detailed records of purchase prices, sale prices, and related costs to get your numbers right.
5. Claiming Deductions You’re Not Entitled To
Over-claiming deductions is a surefire way to get the ATO’s attention. Here are some key things to watch out for:
- Car Expenses: If you only drive to and from work, you cannot claim your cents per km, parking, or tolls. These are considered private expenses.
- Work-Related Travel: If you use your car for work (e.g., visiting clients or suppliers), you can claim expenses, but you need a detailed logbook.
- Other Deductions: Only claim work clothing if it’s a compulsory uniform or protective gear. Always make sure your claims are legit and keep those receipts.
6. Not Keeping Proper Records
Good record-keeping is essential to back up your claims and avoid headaches down the line.
- Keep copies of all relevant documents for at least five years. This includes income records, receipts, and statements for investments or work-related expenses.
- Consider using an app or software to track expenses throughout the year. It’ll make tax time a breeze.
7. Filing Your Tax Return Too Late
Missing the ATO deadline can lead to fines and interest on any unpaid tax.
- Deadlines: For most people, the deadline is 31 October. If you’re using a registered tax agent, you might get an extension—but only if you engage them before the deadline.
- Plan Ahead: Start gathering your documents early and make sure you’ve accounted for everything, including pre-fill data from the ATO. The earlier you start, the less stressful it’ll be.
By keeping these common tax trip hazards in mind, you can save time, avoid penalties, and make your 2025 tax return as smooth as possible. If you’re unsure about anything, get in touch with us by logging into your account, messaging the One Click Life team, or giving us a call at 1300 707 117.
One Click Life can help with your tax!
Need to complete your tax return? One Click Life allows you to complete your online tax return with the click of a button. Why wouldn’t you use an online tax agent if you could claim the fees as a deduction on your next online tax return, which will increase your refund! One Click Life can assist with Tax, Mortgage, Personal Loan, online Will, and Health Insurance, so you can get on with enjoying your life!