This tax time, the ATO will focus on areas where taxpayers are likely to make errors including work-related deductions and expenses, and omitted income.
Aussies chasing bigger refunds warned they could be in trouble this EOFY as ‘too good to be true’ tax hacks explode online, with investors and side hustlers in the firing line.
The Australian Taxation Office has sounded a warning just weeks out from the end of the financial year, warning rental income, cash jobs, work-related deductions and online side gigs were all under scrutiny.
ATO Assistant Commissioner Anita Challen warned Aussies to think twice before acting on information from third-party sources like AI.
ATO Assistant Commissioner Anita Challen said a surge in online “tips”, particularly from AI tools and so-called finfluencers, was fuelling dangerous misinformation.
The warning comes as more Australians turn to property and side income streams to cope with rising living costs, with social media increasingly shaping financial decisions.
“In an environment where misinformation can spread within minutes, it’s important to pause and check your tax information before you act on it,” Ms Challen said. “If a tax claim sounds too good to be true, it’s worth checking.”
She warned AI-generated advice was a growing risk, with many tools pulling from outdated or overseas tax systems that may not apply in Australia.
“AI can be helpful, but it often draws from a broad and inconsistent range of sources, which can lead to inaccurate advice,” Ms Challen said. “Your tax return isn’t the place for guesswork.”
The ATO has made clear it will pay close attention to rental income – including short-stay properties and informal arrangements – as well as deductions that appear inflated or poorly substantiated.
Holiday homes and short-stay rentals are expected to see greater scrutiny.
Tax experts have pointed to a tighter approach from the ATO toward holiday homes and short-stay rentals, with accounting firm BDO warning new guidance means some property owners may not be able to claim certain holding costs – such as interest, council rates and insurance – if the property was considered to be used mainly for private or holiday purposes rather than to produce rental income.
This could apply where owners limit availability during peak periods or use the property themselves for significant parts of the year, meaning expenses must be apportioned or, in some cases, may not be deductible.
They warned the ATO was applying a risk-based compliance approach to take into account how much a property was genuinely used to generate income compared to private use.
While ATO has gone hard with data-matching to seek out discrepancies in income declarations, it has a softer approach too in given some of the legitimate deductions it allows.
Ms Challen said “there are different deductions available for each source of income depending on the nature of the income and occupation. People may be surprised to learn what they can claim, so it’s worth checking.”
The ATO is using data-matching to track income streams.
Among the more unusual – but valid – deductions were sunscreen, hats and sunglasses for outdoor workers in the fitness and sports industries, specific footwear for flight attendants and even guard dog expenses for security workers.
Hairdressers and beauty professionals can claim professional-grade scissors, while other workers may be able to claim items like work bags.
“Taxpayers remain accountable for ensuring the information they or their agents provide to the ATO is accurate – whether the advice came from a friend, online sources, or if AI tools were used in its preparation,” Ms Challen said.
“Dodgy tax advice doesn’t just mislead – it can also lead to significant penalties.”
“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.”
“Getting it right upfront prevents delays, incorrect claims and the need for amendments or ATO compliance action.”
The tax office has also urged al workers to check their superannuation details were up to date with changes set to take effect from July 1 including payday super.
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