Camden Professionals

ATO Tax Return Warning

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[et_pb_column type=”4_4″][et_pb_text admin_label=”Text”]Receiving a warning from the Australian Taxation Office (ATO) can be worrying, but it doesn’t necessarily mean you’ve done anything wrong.

In many cases, an ATO tax return warning is simply a request to review information in your tax return because it doesn’t match data the ATO has received from employers, banks, government agencies or other organisations. A warning is not the same as an audit, and most issues can be resolved quickly by responding promptly and providing the right documentation.

What Is an ATO Tax Return Warning?

An ATO tax return warning is a formal notification advising that something in your tax return requires further review. The ATO uses sophisticated data-matching technology to compare information reported in your tax return with information it receives from sources including:

Employers through Single Touch Payroll
Banks and financial institutions
Share registries
Government agencies
Managed funds
Cryptocurrency exchanges
Ride-sharing and delivery platforms
Short-term accommodation platforms

If something doesn’t match, the ATO will often issue a warning before taking any further action. This gives taxpayers an opportunity to review their return, correct any mistakes or provide supporting information.

ATO Warning vs ATO Audit

Many people assume a warning means they are being audited, but these are two very different processes.

ATO Warning	ATO Audit
Alerts you to a possible issue in your tax return.	A formal investigation into your tax affairs.
Usually occurs before or shortly after your assessment.	Usually occurs after the ATO identifies a significant issue.
Often resolved by providing information or correcting your return.	May involve extensive requests for financial records and documentation.
Low risk of penalties if dealt with promptly.	Greater risk of penalties if errors or omissions are identified.

Receiving a warning does not mean an audit is inevitable. However, ignoring the warning can increase the likelihood of further ATO action.

How to Tell if an ATO Warning Is Genuine

Unfortunately, scammers regularly pretend to be the ATO. Before responding, make sure the communication is legitimate.

The ATO usually contacts taxpayers through:

Letters sent to your registered postal address.
Messages in your ATO Online account through myGov.
Verified phone calls from the ATO.

Be cautious if you receive messages that:

Demand immediate payment.
Threaten arrest or legal action.
Request payment using gift cards or cryptocurrency.
Ask you to click links in text messages or emails.
Request your Tax File Number or banking details unexpectedly.

If you’re unsure, don’t respond. Instead, contact the ATO directly using the official phone number listed on the ATO website.

Why Did You Receive an ATO Warning?

There are several common reasons why the ATO may contact you.

Your Income Doesn’t Match ATO Records

The most common reason is that income reported in your tax return doesn’t match information the ATO has received.

This may include:

Salary and wages
Interest from bank accounts
Dividends
Managed fund distributions
Government payments

Sometimes this simply happens because a taxpayer lodged their return before their income statement was marked “Tax Ready.”

Your Deductions Are Higher Than Expected

The ATO compares deductions claimed by taxpayers working in similar occupations.

If your deductions are significantly higher than the industry average, your return may be selected for review. This doesn’t mean your claims are incorrect,it simply means you’ll need evidence to support them.

Receipts, logbooks and written records are often enough to explain legitimate claims.

You Didn’t Declare All Your Income

The ATO receives information from many third-party platforms.

Income from activities such as:

Uber
DoorDash
Airbnb
Freelance work
Online marketplaces

These must generally be declared in your tax return. If it isn’t, the ATO’s systems will often identify the discrepancy automatically.

You Have Outstanding Tax Returns or Debts

Warnings may also be issued if:

You haven’t lodged previous tax returns.
You owe tax.
Your refund may be used to offset another government debt.

These warnings are often intended to encourage taxpayers to act before stronger enforcement measures are taken.

Your Return Was Selected Randomly

Occasionally, returns are selected as part of the ATO’s random compliance program. This doesn’t necessarily indicate a problem, it simply means your return has been chosen for review.

Will an ATO Warning Delay My Tax Refund?

Yes, it can. If your return is under review, the ATO will usually hold your refund until the issue has been resolved. The length of the review depends on the complexity of the issue. Simple corrections may only take a few weeks, while more detailed reviews involving multiple claims can take longer.

What Should You Do After Receiving an ATO Warning?

The most important thing is don’t ignore it. A practical approach includes:

Read the warning carefully

Understand exactly what the ATO is asking about.

Gather your records

Collect receipts, invoices, bank statements, logbooks and any other documents supporting your tax return.

Decide whether your return needs correcting

If you made a mistake, lodging an amendment may resolve the issue quickly. If your claim is correct, prepare the supporting evidence and respond accordingly.

Seek professional advice

If you’re unsure, a registered tax agent can communicate directly with the ATO on your behalf.

Respond before the deadline

Responding promptly usually results in a faster and simpler resolution.

What Documents Should You Keep?

The documents required depend on the issue being reviewed.

Common records include:

Receipts and invoices
Vehicle logbooks
Work-from-home records
Bank statements
Income statements
Dividend statements
Contracts
Diary notes
Gig economy income summaries

The ATO generally recommends keeping tax records for at least five years after lodging your return.

What Happens If You Ignore an ATO Warning?

Ignoring an ATO warning rarely makes the issue disappear. Depending on the circumstances, the ATO may:

Amend your tax return without your input.
Issue penalties.
Charge interest.
Commence a formal audit.
Review previous years’ tax returns.

Responding early generally results in a much better outcome than waiting for the ATO to take further action.

How Can You Reduce the Chance of Receiving Another Warning?

While no one can guarantee they won’t receive an ATO review, you can significantly reduce the risk by following some simple practices.

These include:

Wait until your income statement is marked Tax Ready before lodging.
Declare all income, including investment and gig economy earnings.
Only claim deductions you can substantiate.
Keep receipts and records for at least five years.
Correct mistakes promptly if you discover them.
Consider using a registered tax agent who understands current ATO compliance focus areas.

Conclusion

Receiving an ATO tax return warning doesn’t automatically mean you’ve made a serious mistake or that you’re about to face an audit. Most warnings arise because the ATO’s data doesn’t match the information reported in your tax return or because a deduction requires further explanation.

The key is to act promptly. Read the warning carefully, gather your supporting documents and seek professional advice if you’re unsure how to respond. Ignoring an ATO warning can lead to penalties, delayed refunds and further compliance action, while addressing it early often results in a straightforward resolution.

Frequently Asked Questions

Does an ATO warning mean I’m being audited?

No. A warning is simply a request to review or explain information in your tax return. It is different from a formal audit.

Why did I receive an ATO warning?

Common reasons include income mismatches, large deduction claims, undeclared investment or gig economy income, outstanding tax returns or random compliance reviews.

Will my tax refund be delayed?

Possibly. The ATO will usually hold your refund until the issue has been resolved.

What should I do first?

Read the warning carefully, gather your records and determine whether you need to amend your tax return or provide additional information.

Can I ignore an ATO warning?

No. Ignoring the warning can result in penalties, amended assessments or even a formal audit.

How long should I keep my tax records?

The ATO generally recommends keeping records for at least five years after lodging your tax return.

Should I contact a tax agent?

If you’re unsure why you received the warning or how to respond, engaging a registered tax agent can help resolve the issue quickly and ensure your rights are protected.

How can I avoid future ATO warnings?

Wait until your income information is complete before lodging, declare all income, keep good records and only claim deductions you can support with evidence.

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au or arrange a time for a meeting so we can discuss your requirements in more detail.

General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.[/et_pb_text][/et_pb_column]
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Camden Professionals

Tax Deductions vs Tax Offsets in Australia

One of the most common questions Australians ask at tax time is, “What’s the difference between a tax deduction and a tax offset?”

While both can reduce the amount of tax you pay, they work in very different ways. Understanding the distinction is important because many taxpayers mistakenly believe they provide the same benefit or that every expense automatically results in a dollar-for-dollar reduction in tax.

The Australian Taxation Office (ATO) regularly reminds taxpayers that deductions reduce your taxable income, while tax offsets reduce the tax payable after your tax has been calculated. Knowing how each works can help you better understand your tax return, avoid common misconceptions and ensure you’re claiming all the benefits you’re entitled to. In this guide, we’ll explain how tax deductions and tax offsets work, provide practical examples, outline common tax offsets available to Australians and discuss why understanding the difference can make tax time less confusing.

What Is a Tax Deduction?

A tax deduction is an expense that reduces your taxable income.

Rather than reducing your tax bill directly, a deduction lowers the amount of income the ATO uses to calculate how much tax you owe.

For example:

Annual taxable income: $90,000
Eligible tax deductions: $5,000

Your taxable income becomes:

$90,000 – $5,000 = $85,000

The ATO then calculates your tax based on the reduced taxable income of $85,000.

The actual tax saving depends on your marginal tax rate, meaning a $1,000 deduction does not result in a $1,000 refund. Instead, the tax benefit is equal to the tax you would have paid on that $1,000.

Common Tax Deductions Australians Can Claim

Depending on your circumstances, common deductions may include:

Work-Related Expenses

Where the ATO rules are satisfied, employees may claim expenses such as:

Tools and equipment
Protective clothing
Uniforms
Professional memberships
Union fees
Self-education expenses directly related to current employment
Home office running expenses
Motor vehicle expenses (where eligible)

The expense must:

Relate directly to earning your income.
Be paid by you and not reimbursed by your employer.
Be supported by appropriate records.

Investment Property Expenses

Property investors may be able to claim deductions for expenses including:

Loan interest
Property management fees
Council rates
Water charges
Insurance premiums
Repairs and maintenance (where immediately deductible)
Depreciation (subject to applicable rules)

Investment Expenses

Investors may also claim certain costs associated with earning assessable income, including:

Interest on investment loans
Investment advice fees (where deductible under current law)
Ongoing portfolio management fees in some circumstances

Charitable Donations

Donations made to organisations endorsed as Deductible Gift Recipients (DGRs) may also be tax deductible.

What Is a Tax Offset?

A tax offset (sometimes called a tax rebate) works differently.

Instead of reducing your taxable income, a tax offset directly reduces the amount of tax you have to pay after your tax liability has been calculated.

This means tax offsets generally provide a dollar-for-dollar reduction in your tax payable, subject to the rules that apply to the specific offset.

For example:

Tax payable before offset: $4,500
Eligible tax offset: $500

Final tax payable:

$4,500 – $500 = $4,000

Unlike deductions, the value of a tax offset does not depend on your marginal tax rate.

Common Tax Offsets Available in Australia

Eligibility depends on your personal circumstances and the income year. Some of the more common offsets include:

Private Health Insurance Rebate

Eligible taxpayers with private hospital cover may receive assistance through the Private Health Insurance Rebate, which is income-tested and can be claimed as a reduction in premiums or through the tax system.

Seniors and Pensioners Tax Offset (SAPTO)

Eligible seniors and age pensioners may qualify for the Seniors and Pensioners Tax Offset (SAPTO), which can reduce or eliminate the amount of tax payable if income falls within the applicable thresholds.

Zone and Overseas Forces Tax Offset

Taxpayers living or working in eligible remote areas, or serving in qualifying overseas defence operations, may be entitled to the Zone or Overseas Forces Tax Offset, subject to eligibility requirements.

Superannuation-Related Tax Offsets

Some taxpayers may be entitled to offsets relating to eligible superannuation contributions, including the superannuation tax offset for a low-income spouse where legislative requirements are met.

Tax Deductions vs Tax Offsets: What’s the Difference?

Feature	Tax Deduction	Tax Offset
Reduces taxable income	✔ Yes	✘ No
Reduces tax payable directly	✘ No	✔ Yes
Value depends on marginal tax rate	✔ Yes	✘ Generally No
Claimed in tax return	✔ Yes	✔ Yes
Subject to eligibility rules	✔ Yes	✔ Yes

Which Saves More Tax?

There is no universal answer. A tax offset often provides a more direct reduction in tax payable because it is generally applied dollar-for-dollar. However, substantial tax deductions can also generate significant tax savings, particularly for taxpayers on higher marginal tax rates.

The overall benefit depends on:

Your taxable income.
Your marginal tax rate.
Your eligibility for particular offsets.
The amount of deductible expenses you incur.

Both deductions and offsets can play an important role in reducing your overall tax liability.

Common Misunderstandings About Tax Deductions

Many Australians incorrectly believe:

“If I spend $1,000, I’ll get $1,000 back.”

This is incorrect. A deduction reduces taxable income—not your tax bill by the amount spent.

“Everything I buy for work is deductible.”

No. The expense must satisfy the ATO’s deduction rules and have a direct connection with earning your assessable income.

“I don’t need receipts.”

Incorrect. The ATO requires taxpayers to keep appropriate records to support most deductions.

“A tax offset and deduction are the same thing.”

They are different. One reduces taxable income; the other reduces tax payable.

Why Professional Advice Can Make a Difference

Australia’s tax system contains numerous deductions, offsets, concessions and eligibility rules that vary depending on your individual circumstances.

A registered tax agent can help you:

Identify deductions you’re entitled to claim.
Determine whether you’re eligible for tax offsets.
Ensure your return complies with ATO requirements.
Maintain appropriate records.
Avoid common errors that may delay processing or result in amendments.

For taxpayers with investment properties, businesses, trusts, capital gains or multiple income sources, professional advice can be particularly valuable.

Conclusion

Although tax deductions and tax offsets both help reduce the amount of tax you pay, they operate in fundamentally different ways.

Tax deductions reduce your taxable income, meaning the value of the deduction depends on your marginal tax rate. Tax offsets, on the other hand, reduce the tax payable after your tax has been calculated and often provide a direct dollar-for-dollar reduction, subject to eligibility criteria.

Understanding this distinction can help you better interpret your tax return, avoid common misconceptions and make informed financial decisions throughout the year. If you’re unsure which deductions or offsets apply to your circumstances, consulting a registered tax professional or referring to the ATO’s official guidance can help ensure you receive every tax benefit you’re legally entitled to while remaining fully compliant with Australian tax law.

Frequently Asked Questions

What’s the main difference between a tax deduction and a tax offset?

A tax deduction reduces your taxable income before tax is calculated, while a tax offset reduces the amount of tax payable after your tax liability has been worked out.

Does a tax deduction give me a dollar-for-dollar refund?

No. The value of a deduction depends on your marginal tax rate. A $1,000 deduction reduces your taxable income by $1,000, not your tax bill by $1,000.

Are tax offsets better than deductions?

Not necessarily. Tax offsets generally reduce tax payable directly, but deductions can also provide substantial tax savings depending on your income and marginal tax rate.

Can I claim both deductions and tax offsets?

Yes. Many taxpayers are eligible to claim deductions as well as tax offsets, provided they meet the relevant eligibility requirements.

Do I need receipts for tax deductions?

Generally, yes. The ATO requires taxpayers to keep records such as receipts, invoices, bank statements or other evidence to support deductible expenses.

Are all tax offsets refundable?

No. Some tax offsets are non-refundable, meaning they can reduce your tax payable to zero but generally cannot create a refund beyond the tax you’ve paid. The rules differ depending on the specific offset.

Should I use a registered tax agent?

If your tax affairs are complex or you’re unsure about your eligibility for deductions or offsets, a registered tax agent can help ensure your return is accurate and compliant while identifying legitimate tax-saving opportunities.

Sources

Australian Taxation Office (ATO)
CPA Australia
Chartered Accountants Australia and New Zealand (CA ANZ)

How can we help?

General Advice Warning

Camden Professionals

Tax Hacks, Half-Truths and What the ATO Is Watching This Tax Time

As Australians prepare to lodge their annual tax returns, social media is once again flooded with “tax hacks,” refund calculators, AI-generated tax tips and financial influencers promising ways to maximise your refund.

While some online information may be useful, much of it is general in nature and may not apply to your personal circumstances. In some cases, advice shared online is simply incorrect and could result in your tax return being amended, your refund reduced, or penalties being imposed by the Australian Taxation Office (ATO).

The ATO has made it clear that taxpayers are responsible for every figure and claim included in their tax return—even if the information came from a friend, family member, influencer, AI chatbot or social media platform.This tax season, the ATO is increasing its compliance activities and using sophisticated data-matching technology to identify incorrect deductions, omitted income and unsupported claims. Understanding the ATO’s focus areas can help you avoid common mistakes while ensuring you still claim every deduction you’re legally entitled to receive.

Why the ATO Is Warning Australians About Social Media Tax Advice

Tax time has become one of the busiest periods for financial content online. TikTok, Facebook, Instagram, YouTube and other platforms are filled with videos claiming to reveal “secret deductions,” “ATO loopholes” or “refund hacks.”

Although these videos often attract millions of views, the ATO warns that many contain misleading or inaccurate information.

Common examples include:

Claiming personal expenses as work-related deductions.
Suggesting taxpayers can claim deductions without receipts.
Encouraging exaggerated work-from-home claims.
Promoting inflated motor vehicle deductions.
Advising people to omit small amounts of income because “the ATO won’t notice.”

The reality is very different. Australia’s tax system operates on a self-assessment basis, meaning taxpayers are responsible for ensuring the information they lodge is complete, accurate and supported by appropriate evidence.If the ATO reviews your return, you may be asked to provide documentation to support your claims. If you cannot do so, deductions may be denied and penalties or interest may apply.

The ATO’s Three Key Compliance Focus Areas This Tax Time

Each year, the ATO identifies areas where taxpayers commonly make mistakes. For the 2026 tax season, three areas remain a major focus:

Work-related expenses
Work-from-home deductions
Omitted income

These are not necessarily areas of deliberate tax avoidance; many errors occur because taxpayers misunderstand the rules or rely on incorrect advice.

ATO Focus Area 1: Work-Related Expense Claims

Claim Only Expenses That Meet the ATO’s Three Golden Rules

Work-related expenses continue to be one of the most scrutinised areas of Australian tax returns.

To claim a deduction, you must satisfy all three ATO requirements:

The expense must directly relate to earning your income

There must be a clear connection between the expense and your employment duties.

You must have paid for the expense yourself

If your employer reimbursed you or supplied the item, you generally cannot claim it.

You must keep records

Acceptable evidence includes:

Tax invoices
Receipts
Bank statements
Logbooks
Diary entries
Digital records

Without supporting records, deductions may be disallowed during an ATO review.

Occupation-Specific Deductions Matter

One of the biggest mistakes taxpayers make is assuming deductions claimed by friends or colleagues also apply to them. The ATO publishes occupation-specific guidance covering common deductible expenses across a wide range of industries, including:

Teachers
Nurses
Tradies
Office workers
Healthcare professionals
Sales representatives
Hospitality employees
IT professionals
Construction workers

A deduction that is legitimate for one occupation may not be deductible for another.

ATO Focus Area 2: Work-From-Home Claims

Don’t Fall into the Double-Dipping Trap

Remote and hybrid working arrangements remain common across Australia, making work-from-home deductions one of the most frequently claimed tax offsets. The ATO’s fixed-rate method allows eligible taxpayers to claim 70 cents per hour worked from home (for the relevant income year). This rate is designed to cover a range of running expenses, including:

Electricity and gas
Internet usage
Mobile and home phone expenses
Stationery
Computer consumables

One of the most common mistakes occurs when taxpayers claim the fixed-rate method and then separately claim expenses already included in that hourly rate. This practice—often referred to as “double-dipping”—can result in incorrect claims and attract ATO scrutiny.

Keep Accurate Work-From-Home Records

The ATO requires taxpayers using the fixed-rate method to maintain records of:

Actual hours worked from home
Evidence of working from home during those hours
Records supporting any additional expenses claimed separately (where permitted)

Good record-keeping throughout the year makes tax time significantly easier and helps substantiate your claim if reviewed.

ATO Focus Area 3: Omitted Income

The ATO’s Data Matching Is More Advanced Than Ever

Many taxpayers still believe smaller income streams go unnoticed. In reality, the ATO receives extensive information directly from third parties, allowing it to compare your tax return with independently reported income.

Income you must declare includes:

Salary and wages
Bonus payments
Director’s fees
Investment income
Bank interest
Dividends
Rental income
Capital gains
Cryptocurrency transactions
Side-hustle income
Freelance work
Cash jobs
Sharing economy income (such as ride-sharing or short-term accommodation)

Even relatively small amounts of income may already be visible to the ATO before you lodge your return.

Side Hustles and the Gig Economy Remain Under the Spotlight

The growth of online marketplaces, digital platforms and freelance work means many Australians now earn income outside traditional employment.

Examples include:

Food delivery
Ride-sharing
Freelance consulting
Online content creation
Selling goods online
Holiday accommodation platforms
Digital services

Many taxpayers mistakenly believe these earnings are “informal” income.If you receive payment for providing goods or services, that income is generally taxable and must be declared.

AI Can Help Explain Tax Rules But It Doesn’t Replace Professional Advice

Artificial intelligence tools are becoming increasingly popular during tax season. While AI can assist with explaining general tax concepts or directing taxpayers to official guidance, it cannot assess your personal circumstances or determine whether a deduction applies to you.

The ATO reminds taxpayers that they remain legally responsible for the accuracy of their tax return, regardless of whether information was obtained from an AI chatbot or another online source. When your circumstances involve investment properties, capital gains, business income, trusts or complex deductions, professional advice is often the safest approach.

Don’t Miss Legitimate Tax Deductions

Although compliance is a major focus, taxpayers should not become so cautious that they overlook deductions they are legally entitled to claim.

Common deductible expenses may include:

Professional memberships
Union fees
Self-education expenses (where directly related to current employment)
Protective clothing and uniforms
Tools and equipment
Home office running expenses
Motor vehicle expenses (where eligible)
Donations to deductible gift recipients
Income protection insurance premiums (where applicable)

Every taxpayer’s circumstances are different, making personalised advice particularly valuable.

Good Record Keeping Makes Tax Time Easier

One of the simplest ways to avoid problems is to maintain accurate records throughout the year. Helpful records include:

Digital receipts
Bank statements
Expense tracking apps
Work diaries
Motor vehicle logbooks
Home office records
Investment statements

The ATO recommends keeping records for at least five years after lodging your return.

Why Using a Registered Tax Agent Can Help

A registered tax agent stays up to date with changing tax legislation and ATO guidance.

They can help you:

Identify legitimate deductions.
Ensure all income is correctly reported.
Avoid common compliance errors.
Prepare accurate records.
Respond to any ATO queries.
Reduce the likelihood of amendments.

Professional advice can be particularly valuable for taxpayers with multiple income sources or more complex financial affairs.

Conclusion

Tax time is about getting your return right not simply getting it lodged quickly or chasing the biggest possible refund.

The ATO continues to increase its use of sophisticated data matching, allowing it to identify incorrect deductions, omitted income and unsupported claims with greater accuracy than ever before. Advice found on social media, AI tools or online forums may be helpful as a starting point, but it should never replace official ATO guidance or personalised professional advice. By understanding the ATO’s key compliance focus areas, maintaining accurate records, declaring all sources of income and claiming only genuine deductions, you can maximise your legitimate tax benefits while reducing the risk of audits, amended assessments and penalties.

When in doubt, consult the ATO’s official resources or speak with a registered tax professional who can ensure your return is accurate, compliant and tailored to your individual circumstances.

Frequently Asked Questions

Can I rely on tax advice I see on TikTok or social media?

No. While some information may be accurate, much of it is general or misleading. The ATO states that taxpayers are responsible for ensuring every claim in their tax return is correct and supported by evidence.

What are the ATO’s main focus areas this tax time?

The ATO is closely monitoring work-related expenses, work-from-home deductions and omitted income, as these remain common areas where taxpayers make mistakes.

What is “double-dipping” when claiming work-from-home expenses?

Double-dipping occurs when you claim the ATO’s fixed-rate work-from-home method and then separately claim expenses already included in that hourly rate, such as electricity or internet costs.

Do I need receipts for every deduction?

Generally, yes. The ATO requires taxpayers to keep records such as receipts, invoices, bank statements, logbooks or diary entries to substantiate most deductions.

Does the ATO know about side-hustle income?

In many cases, yes. The ATO receives data from employers, banks, digital platforms, financial institutions and other third parties through sophisticated data-matching programs.

Can AI prepare my tax return?

AI can explain general tax concepts but cannot determine your personal tax position. You remain responsible for ensuring your return is accurate and compliant with Australian tax law.

Should I use a registered tax agent?

If your tax affairs involve investment properties, business income, capital gains, trusts, cryptocurrency or multiple income sources, a registered tax agent can help ensure your return is accurate while identifying deductions you may otherwise miss.

How can we help?

General Advice Warning

Camden Professionals

Why you should wait to lodge your tax return

Every year, millions of Australians are eager to lodge their tax returns as soon as the new financial year begins on 1 July. While it may be tempting to lodge early and receive your refund sooner, the Australian Taxation Office (ATO) consistently advises taxpayers to wait until all income information has been reported and pre-filled before submitting their return.

Rushing to lodge your tax return can lead to errors, missing income, incorrect deductions, delays in processing, amended assessments and, in some cases, unwanted attention from the ATO.

With the ATO now receiving more real-time information from employers, banks, health insurers, government agencies, investment platforms and cryptocurrency exchanges than ever before, lodging too early has become increasingly risky.

Here’s why tax professionals and the ATO recommend waiting before lodging your 2025–26 tax return.

Why Does the ATO Recommend Waiting to Lodge Your Tax Return?

The ATO receives millions of pieces of information from third parties throughout July and August. While some information is available immediately after 30 June, much of it isn’t finalised until later in July or even August.

According to the ATO, taxpayers should wait until their income statement is marked “Tax Ready” and pre-fill information is complete before lodging.

The ATO receives data from:

Employers (Single Touch Payroll)
Banks and financial institutions
Government agencies (Centrelink, Services Australia)
Health insurers
Superannuation funds
Share registries
Managed funds
Investment platforms
Cryptocurrency exchanges
Dividend payment providers

If any of this information is missing when you lodge, your tax return may be incorrect.

Your Employer May Not Have Finalised Your Income Statement

Under Single Touch Payroll (STP), employers report payroll information directly to the ATO throughout the year. However, this information is not necessarily finalised on 30 June.

Many employers spend the first few weeks of July completing:

Payroll reconciliations
Final leave adjustments
Fringe benefits reporting
Payroll corrections
EOFY balancing

Until this process is complete, your income statement will display as “Not Tax Ready.”

Lodging before this occurs could mean:

Incorrect salary figures
Missing allowances
Incorrect PAYG withholding
Incorrect leave payments

Bank Interest May Not Yet Be Reported

Banks and financial institutions submit annual interest information to the ATO after the financial year ends.

This includes:

Savings account interest
Offset account interest
Term deposits
Investment accounts

If you lodge before this information is received, your return may omit taxable interest income. The ATO can later amend your assessment once the information arrives.

Dividend Income Often Arrives Weeks Later

If you own Australian shares, dividend information is usually supplied by share registries after year end.

This includes:

Dividend payments
Franking credits
Foreign income
Dividend reinvestment details

Many taxpayers accidentally forget small dividend payments, which the ATO later identifies through data matching.

Managed Fund Tax Statements Usually Aren’t Ready Until August

This is one of the biggest reasons accountants recommend waiting.

Managed funds, ETFs and investment trusts often don’t issue annual tax statements until late July or August.

These tax statements contain:

Capital gains
Foreign income
Franking credits
Tax deferred amounts
Trust distributions

Without the official annual tax statement, investors frequently report incorrect income.

Private Health Insurance Information May Be Missing

Private health insurers report:

Premiums paid
Rebate entitlement
Lifetime Health Cover loading
Medicare Levy Surcharge information

Incorrect reporting may affect:

Medicare Levy calculations
Private Health Insurance rebate
Tax payable

Government Payment Information Can Take Time

If you received:

Centrelink payments
Parenting payments
JobSeeker
Youth Allowance
Austudy
Disaster payments
Paid Parental Leave

the reporting information may not appear immediately in early July.

Waiting allows these payments to automatically pre-fill.

Cryptocurrency Transactions Are Increasingly Data Matched

Many Australians mistakenly believe crypto transactions are anonymous.

The ATO now receives extensive transaction data from cryptocurrency exchanges.

This includes:

Purchases
Sales
Swaps
Staking rewards
Interest
Transfers

If you lodge before calculating your crypto gains correctly, you may need to amend your return later.

Investment Property Information Needs Time to Prepare

Property investors often need several weeks to gather:

Property manager annual statements
Loan interest summaries
Council rates
Water rates
Insurance
Repairs
Depreciation reports

Many accountants don’t receive complete rental information until August.

Waiting ensures deductions are claimed correctly.

The ATO’s Pre-fill Data Significantly Reduces Errors

ATO pre-fill data automatically imports:

Salary
PAYG tax withheld
Bank interest
Dividends
Government payments
Health insurance
Super contributions
Managed fund distributions
Investment income

Waiting until this information is available makes preparing an accurate return much easier.

Lodging Too Early Can Delay Your Refund

Many people assume lodging early means receiving their refund earlier.

Ironically, the opposite often occurs.

If information is missing, the ATO may:

Stop processing
Request further information
Amend your return
Delay issuing your refund

Returns lodged after all information has been received often process more smoothly.

Common Mistakes Early Lodgers Make

Tax accountants regularly see taxpayers who:

Forget bank interest
Miss dividend income
Forget government payments
Miss managed fund distributions
Incorrectly calculate rental deductions
Omit cryptocurrency gains
Claim deductions without records
Use estimated rather than actual figures

These mistakes often require amended assessments later.

When Is the Best Time to Lodge?

While every taxpayer is different, many accountants recommend waiting until late July or early August.

By then:

Most employers have finalised payroll.
Banks have reported interest.
Government payment information has been received.
Health insurance data has been uploaded.
Most dividend information has been reported.
ATO pre-fill information is substantially complete.

Investors with managed funds may need to wait until late August or September depending on when annual tax statements are issued.

How an Accountant Can Help

Registered tax agents often identify deductions taxpayers overlook, while ensuring income is reported correctly using complete ATO data.

An accountant can assist with:

Rental property deductions
Capital gains tax
Cryptocurrency reporting
Business income
Work-related expenses
Motor vehicle claims
Investment income
Trust distributions
Record keeping
Tax planning strategies

Importantly, taxpayers who use a registered tax agent may also have access to extended lodgement deadlines, provided they are on the agent’s lodgement program before the standard due date.

Conclusion

While it can be tempting to lodge your tax return as soon as the financial year ends, waiting a few extra weeks can save significant time, reduce the likelihood of mistakes and help ensure your assessment is accurate.

The ATO continues to expand its data matching capabilities, receiving information from employers, banks, government agencies, investment providers and financial institutions. By waiting until your income statement is marked “Tax Ready” and your pre-fill information is complete, you reduce the risk of missing income, claiming incorrect amounts or requiring an amended assessment later.

If your tax affairs include investment properties, shares, managed funds, cryptocurrency or business income, seeking advice from a registered tax professional can provide additional peace of mind and help ensure you’re claiming all eligible deductions while meeting your tax obligations.

Frequently Asked Questions

Should I lodge my tax return on 1 July?

Generally, no. The ATO recommends waiting until your employer has finalised your income statement and your pre-fill information is complete.

What happens if I lodge too early?

You may omit income, report incorrect amounts, experience processing delays or need to lodge an amended tax return later.

How do I know when my tax information is ready?

Log in to myGov and check your income statement. Once it displays as “Tax Ready” and your pre-fill information is available, you are in a better position to lodge.

Why do accountants recommend waiting until August?

By August, most employers, banks, health insurers and government agencies have reported their information to the ATO, reducing the chance of errors.

Can I amend my tax return if I make a mistake?

Yes. If additional income or corrections become available after lodging, you can request an amendment. However, lodging correctly the first time is generally simpler and may avoid delays.

Will waiting delay my tax refund?

Not necessarily. In many cases, waiting until all information has been reported results in faster processing because the ATO is less likely to pause your return to verify missing information.

Does this advice apply to property investors and share investors?

Yes. Investors often need additional tax statements for rental properties, managed funds, dividends and capital gains, many of which are not available in early July.

Sources:

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Camden Professionals

What your notice of assessment means

Understanding your ATO notice of assessment can change how your tax is calculated. A Notice of Assessment (NOA) is generally issued by the ATO when individual tax return is lodged and assessed. If you have a myGov account, your NOA and tax receipt is sent to your myGov Inbox. You can view and print some NOA from the myGov Inbox.

If you require a copy of a current or previous income year NOA and you can’t locate it in your myGov Inbox.

What a NOA contains

Your notice of assessment (NOA) is the statement the ATO issue that explains how your tax assessment is calculated. Your NOA may show the amount of:

Tax you owe on your taxable income
Credit you may have for tax already paid during the income year
Tax you need to pay or your refund entitlement
Any excess private health reduction or refund thereon (if applicable)

When you receive your notice of assessment, you should check everything is correct.

Tax Debts

If you have a tax debt, check your NOA – it will include your payment advice and due date. Under the law, the ATO have a period of time to review your income tax return. During this time, they may increase or decrease the amount of tax payable or refundable on your initial NOA. This review period is normally 2 years, but in certain circumstances it can be 4 years.

When you will receive your NOA

The ATO will send your NOA to after your income tax return is processed. The processing timeframes the ATO aims for depends on the lodgement method you use. If you lodge:

online using myTax, – within 2 weeks
by paper, they aim for processing within 50 business days (10 weeks) from the date lodged (paper lodgements may take up to 7 weeks to show on the ATO systems)
through a tax agent – within 2 weeks

Why your tax return outcome may change in 2023

The outcome of your 2023 income tax return may be different than in previous income years. You may have a lower refund, or you may even receive a tax bill. Understanding your ATO notice of assessment and your income tax return outcome may change for any of the following reasons:

A tax offset you received previously is no longer available or you are no longer eligible for an offset – for example, the low- and middle-income tax offset ended on 30 June 2022
Your credit or refund has been offset against other debt – including debts on hold with the ATO or debts you have with other government agencies (for example, Centrelink)
Your income or deductions for the income year are different from previous income years
The ATO finds a difference between the details in your income tax return and the information they may receive through pre-fill data or their data matching program
You have not advised your payer of your study or training support loan and your income is above the minimum repayment threshold – this will result in a compulsory repayment amount
Some debts will not be applied to your income tax return until after it is lodged. This means your tax estimate in myTax or from your registered tax agent may not match your final tax outcome.

If you believe you will get a tax bill, it’s still important to lodge your tax return on time even if you can’t pay immediately.

If you think your NOA is wrong

Check all the details on your NOA with the details you submitted in your income tax return. If you made a mistake when completing your return, you can correct (amend) your income tax return.

You can dispute or object to your NOA if you are dissatisfied with it or if you disagree with the ATO’s decision to retain a refund. Generally, you must lodge your objection within the 2 year or 4 year amendment period, whichever applies to you.

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The Importance of Lodging a Tax Return

Its Tax Time again and as you prepare for lodging your return we want to ensure why you need to understand the importance of lodging your returns and fulfilling your tax obligations.

Lodging an income tax return is an important financial responsibility for individuals and businesses in many countries. Here are some reasons why lodging an income tax return is important.

Compliance with tax laws

The ATO requires individuals and businesses to report their income, expenses, and financial transactions accurately. Lodging an income tax return ensures compliance with tax laws and regulations, demonstrating your commitment to fulfilling your legal obligations. By adhering to the law, you will be contributing to the tax system.

Accurate assessment of your tax liability

By lodging an income tax return, you provide the necessary information for tax authorities to assess your tax liability accurately. This helps to ensure that you are paying the correct amount of taxes based on your income and applicable tax rates. Having an accurate assessment of your tax liability, will prevent you from any under or over payment.

Claiming deductions and tax credits

An income tax return allows you to claim deductions and credits that can help reduce your overall tax liability. These deductions and credits may include expenses related to your motor vehicle, training, home ownership, business expenses, charitable donations, and more.

Filing an income tax return provides an opportunity to optimise your tax situation and potentially receive tax benefits. Which in turn puts more money back into your pocket, making it one of the benefits of lodging a tax return.

Refunds and tax benefits

If you’ve had taxes withheld from your income throughout the year, lodging an income tax return allows you to claim any overpaid taxes and potentially receive a tax refund. Refunds can provide you with extra funds that you can use for savings, paying off debts, or investing. By doing this step, you ensure that you receive the benefits and refunds.

Avoid penalties and interest

Failure to lodge an income tax return or filing late can result in penalties and interest charges imposed by the ATO. By fulfilling your obligation and lodging your income tax return on time, you can avoid unnecessary financial penalties and any associated legal consequences.

Timely filing demonstrates being able to meet responsibilities and avoid any financial fines. The ATO calculates their fines by using a statutory formula, which is based on your behaviour and the amount of tax avoided.

Establishing a tax record

Consistently lodging income tax returns helps establish a clear tax record with the tax authorities. This record can be important for various purposes, such as obtaining loans, mortgages, visas, or government benefits. It demonstrates your financial history and responsibility, which can positively impact your financial reputation. It can also lead to helping out to purchase a home.

Compliance with financial institutions

Some financial institutions may require proof of income or income tax returns as part of their application process for loans, credit cards, or other financial products. By regularly lodging income tax returns, you have the necessary documentation to satisfy these requirements.

Consult with a tax expert.

Remember that the importance and specifics of lodging an income tax return can vary. It’s advisable to consult with a tax professional or refer to the tax laws and regulations of your specific jurisdiction to understand the requirements and benefits applicable to your situation. The importance of lodging a tax return cannot be understated.

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How to use Super contributions to boost your 2023 Tax refund

Did you know that you can make a concessional superannuation contribution and get $5000 or more as a tax refund this year?

Super concessional contribution caps

There is a limit on how much you can put into super each year from your pre-tax income. Such contributions are called concessional contributions.

From 1 July 2021, you can contribute up to $27,500 into your super fund. This includes your employer’s super guarantee contribution, any salary sacrificed amounts and tax-deductible personal contributions (see below for more details on salary sacrificing super and making tax deductible contributions). This is called the concessional contributions cap.

From 1 July 2018, you can carry forward the unused part of your $25,000 annual concessional contributions cap for up to five years (using up the earliest year first) provided your superannuation balance is less than $500,000. This means that the 2019/20 financial year (ie, the year beginning 1 July 2019) is the first year that unused concessional contribution amounts can be used.

Prior to 1 July 2022, if you were aged between 67 and 74, you could only make concessional contributions if you passed the “work test”. That means that you had to work 40 hours or more in a consecutive 30-day period in the financial year in order to make contributions. From 1 July 2022, you do not need to pass the work test unless you are claiming a tax deduction for your personal superannuation contributions. The trustee of the superannuation fund will no longer have to apply the work test when they accept superannuation contributions from their members. For individuals between 67 and 74 wishing to claim a tax deduction for their super contributions, the ATO will administer the work test when the tax return is lodged.

After-tax contributions

After-tax contributions are known as ‘non-concessional contributions’ because you don’t receive a tax deduction. Such contributions are the easiest way to top up your super as you simply deposit your own money into your super account. If you have some spare cash, this is a great way to give your retirement savings a boost because the money is then in a low-tax environment, meaning you’ll generally get a better return than if you’d invested in the same assets outside super.

Contributions from your after-tax income don’t get taxed when your fund receives them because you have already paid tax on the income from which the contribution was paid

From 1 July 2021, you can pay up to $110,000 in non-concessional contributions each year. However, if your superannuation balance is more than $1.7 million you cannot make non-concessional contributions. There is also a three year “bring-forward” rule for taxpayers who are under 75 years of age which allows you to contribute up to $330,000 which covers the current and next two income years.

Making tax-deductible top-up super contributions

From 1 July 2017, you can make additional concessional contributions up to your concessional contributions cap (currently $27,500 plus any unused amounts from 2019 onwards) and claim an income tax deduction for doing it. Prior to 1 July 2017, only the self-employed and those not working were able to claim such a tax deduction (and then only if you received less than 10% of your total assessable income from employment).

The removal of the 10% income restriction, and the ability to carry forward unused amounts of the concessional cap from prior years, greatly increases the capacity for people to top-up their super fund, provided they don’t breach their concessional contributions cap. A 15% contributions tax is deducted from any superannuation contribution that has been claimed as a tax deduction.

If you are aged between 67 and 74 years of age, you’ll still need to pass the work test (see above) to make a tax-deductible contribution.

Example

Jo is a fulltime dental assistant. During 2021-22, she earned $85,000 before tax. Jo has no other income. She made a personal contribution of $15,000 to an eligible superfund during the income year and notifies them that she intends to claim a deduction. Jo’s superfund acknowledges that she will claim a $15,000 deduction and taxes the contribution at 15% ($2,250). Jo is eligible to claim a deduction for $15,000 and does this in her 2022 Income tax return. This deduction will increase her tax refund by $5,175, an overall tax saving of $2,925.

Note: As well as making super contributions from your self-employed income or employment income, it is also possible to make super contributions from investment income (including dividends or rental income) and capital gains.

Tax offset for super contributions on behalf of your spouse

You may be able to claim a tax offset if you make an eligible super contribution on behalf of your spouse (married or de facto). They need to earn under $40,000 or not work.

Your contribution must be to either your spouse’s:

complying super fund
retirement savings account (RSA)

You may be able to claim either a:

full tax offset of $540, if you pay $3,000 or more and your spouse earns $37,000 or less
partial tax offset, if you pay less than $3,000 and your spouse earns more than $37,000 but less than $40,000.

You also need to meet all the following conditions for the income year of your claim:

You made the contributions to a complying super fund
Both you and your spouse were Australian residents
The contributions were not deductible by you
You and your spouse were not living separately and apart on a permanent basis

Your spouse was under:

75 years old for claims from 1 July 2020
70 years old for earlier income years

You do not exceed the general transfer balance cap of:

$1.7 million for 2021–22
$1.6 million for earlier income years.

Note: You can’t claim the tax offset for contributions to your own fund which you split to a spouse. This is a rollover or transfer, not a contribution.

Government co-contributions

Government co-contributions to super can help people on middle or lower incomes to have more money when they retire. By contributing between $20-$1,000 to your super from your take-home pay, the government could match your contribution, up to $500.

Key points

You’re eligible if you earn less than $57,016 before tax in the 2022-23 financial year
If eligible, you could get up to $500 for your super as a co-contribution from the government
You need to contribute to your super from your take-home pay
The amount can be any amount between $20 and $1000
You need to contribute before the end of the financial year, which is 30 June 2023
The Australian Taxation Office (ATO) will decide how much you’re eligible to receive. They work this out when you lodge your tax return. Payment is made into your super account automatically.

How government co-contributions work

Adding to your super will help your super savings work harder and grow in the long-term. The amount of government co-contribution you receive will depend on how much you earn, and how much you decide to contribute to your super, from your take-home pay.

You may be eligible for a government co-contribution if you:

earn less than $57,016 before tax in the 2022-23 financial year. This includes all assessable income. The ATO has helpful information to work this out
earn 10% or more of that income from employment or self-employment
have a total superannuation balance of less than $1.7 million at the start of the financial year.
have not exceeded the after-tax contributions cap
are a permanent resident of Australia for the full financial year

What you need to do

You don’t need to apply or fill out any forms.

Lodge your tax return after the end of the financial year. The ATO will determine if you are eligible. You’ll need to make sure your tax file number is linked to your Aware Super account. The ATO will then automatically pay a co-contribution into your account.

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Camden Professionals

How to minimise your business tax this EOFY

A guide to the strategies you can use to minimise your business tax.

IS YOUR BUSINESS A “SMALL BUSINESS” ENTITY?

Small businesses can access a range of tax concessions from the ATO. To qualify as a “Small Business Entity”, the business must have an aggregated turnover (your annual turnover plus the annual turnover of any business connected / affiliated with you) of less than $10 million and be operating a business for all or part of the 2023 year.

LOWER COMPANY TAX RATES

The 2023 company tax rate for businesses with less than $50 million turnover is 25%, if 80% or less of a company’s assessable income is “passive income” (such as interest dividends, rent, royalties, and net capital gains). If you use a Trust structure, one strategy is to allocate profits to a “Bucket Company” and cap your tax at 25% for the 2023 year. Note that this company must qualify as a “base rate” entity to be eligible for the lower 25% company tax rate. Please discuss with us whether your company will qualify.

TEMPORARY FULL EXPENSING FOR ASSET PURCHASES

Businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets. For businesses with an aggregated turnover of less than $50 million, temporary full expensing also applies to the business portion of eligible second-hand depreciating assets. Temporary full expensing is ending on 30 June 2023.

You should buy these assets and use them or have them ready for use before 30 June 2023 to qualify for a 2023 tax deduction. Talk to us today about your options!

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS

The concessional superannuation cap for 2023 is $27,500 for all individuals. Do not go over this limit or you will pay more tax! Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge.

Note: For the contribution to be counted towards the employee’s 2023 contribution cap, it must be received by the fund by 30 June 2023.

TOOLS OF TRADE / FBT EXEMPT ITEMS

The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit. Items that can be packaged include handheld/portable tools of trade, computer software, notebook computers, personal electronic organisers, digital cameras, briefcases, protective clothing, and mobile phones. If structured correctly, the employer will be entitled to a tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit, and the employee’s salary package will only be reduced by the GST-exclusive cost of the items purchased.

You should buy these items before 30 June 2023.

REPAIRS & MAINTENANCE

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2023.

PAY EMPLOYEE SUPERANNUATION NOW

To claim a tax deduction in the 2023 financial year, you need to ensure that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June 2023. You should avoid making last minute superannuation payments as processing delays may cause them to be received after year-end. If for any reasons you end up having to make last minute payments and you would like to claim them as deductions for the current year, contact us immediately and before you make any payments for possible contributions.

DEFER INCOME

If possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2023. This strategy pushes tax payable to future years.

BRING FORWARD EXPENSES

Purchase consumable items BEFORE 30 June 2023. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year.

DEFER INVESTMENT INCOME & CAPITAL GAINS

If possible, arrange for the receipt of Investment Income (e.g., interest on Term Deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2023. The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date!

MOTOR VEHICLE LOGBOOK

Ensure that you have kept an accurate and complete Motor Vehicle Logbook for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2023. You should make a record of your odometer reading as at 30 June 2023 and keep all receipts/invoices for motor vehicle expenses. An alternative (with no log book needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.

INVESTMENT PROPERTY DEPRECIATION

If you own a rental property and haven’t already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building writeoff deductions on your rental property.

PRIVATE COMPANY (“DIV 7A”) LOANS

Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2023. Current year loans must be either paid back in full or have a loan agreement entered in before the due date of lodgement for the company return, or risk having it counted as an unfranked dividend in the return of the individual.

REALISE CAPITAL LOSSES

Tax is normally payable on any capital gains. You should consider selling any non-performing investments you hold before 30 June 2023 to crystallise a capital loss and reduce or even eliminate any potential capital gains tax liability. Unused capital losses can be carried forward to offset future capital gains.

YEAR-END STOCKTAKE /WORK IN PROGRESS

If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2023. Review your listing and write-off any obsolete or worthless stock items. Talk to us about your different options for valuing Stock, and how they affect your tax payable.

WRITE-OFF BAD DEBTS

Review your Trade Debtors listing and write-off all bad debts BEFORE 30 June 2023. Prepare a management meeting document listing each bad debt, as evidence that these amounts were written off prior to year-end and enter these into your accounting system before 30 June 2023.

ACCRUED EXPENSES

Ensure you accrue expenses where you have a present existing liability to pay the expense irrespective of the fact that you may receive the invoice or make the payment after year end. Example: Accrued wages – for instance, if you have a monthly pay cycle ending on 15 June, you can accrue the costs of your payroll from 16 June to 30 June and claim the wage cost as a tax deduction in the 2023 year itself.

BONUSES

If you have not paid your bonuses by 30 June, you may still be able to claim a deduction provided you have an obligation to pay this. To substantiate this, ensure the amount is quantifiable and approved (via minutes) and the staff are notified of the bonus.

SMALL BUSINESS CONCESSIONS – PREPAYMENTS

“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2023 and obtain a full tax deduction in the 2023 financial year.

TRUSTEE RESOLUTIONS

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2023 for all Discretionary (“Family”) Trusts. The ATO have recently released a number of Tax Rulings that may affect trust distributions to adult children, so Tax Planning for 2023 will be vital for anyone using a Family Trust.

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How to minimise your personal tax this EOFY

Now’s the time to review what strategies you can use to minimise your tax before 30 June 2023. Imagine what you could do with tax saved? You could:

Reduce your home loan
Top up your super
Save for a holiday (when we can travel again)
Deposit for an Investment Property
Pay for your children’s education
Upgrade your car

The most important thing to remember is that there is no point in spending money to get a tax deduction unless it’s going to result in something useful for you.

HOME OFFICE EXPENSES

If you have been working from home, you may have expenses you can claim a tax deduction for. The ATO allows you to claim using a “Revised Fixed Rate Method” an amount of $0.67 per work hour for the 2023 year. This amount covers most expenses from working from home, and you need to keep a detailed record of how you calculated the number of hours you are claiming. You can also claim expenses using an “Actual Cost” method – so please keep all invoices and receipts during the entire year to prove all claims.

SUPERANNUATION CONTRIBUTIONS

While you might not be flush with cash now and able to put large amounts into superannuation, it’s important that you are aware of what is possible to maximise your super balance and possibly reduce your tax at the same time. The tax-deductible super contribution limit (or “cap”) is $27,500 for all individuals under age 75. Individuals need to pass a work test if over age 67. To save tax, consider making the maximum tax deductible super contribution this year before 30 June 2023. The advantage of this strategy is that superannuation contributions are taxed at between 15% to 30% compared to typical personal income tax rates of between 34.5% and 47%.

CARRIED FORWARD CONTRIBUTIONS

Carry-forward contributions are not a new type of contribution, they are simply new rules that allow super fund members to use any of their unused concessional contributions cap on a rolling basis for five years.

This means if you don’t use the full amount of your concessional contribution cap ($25,000 from 2019 to 2021, and $27,500 for 2021 and 2022), you may qualify to carry-forward the unused amount and take advantage of it for up to five years later. Carry-forward contributions are calculated on a rolling basis over five years, but any amount not used after five years expires. These carry-forward rules only relate to concessional contributions into super, not non concessional contributions, as they have different caps.

SPOUSE SUPER CONTRIBUTIONS

You can make super contributions on behalf of your spouse (married or de facto), provided you meet eligibility criteria, and your super fund allows it. Doing this not only helps to boost your spouse’s retirement savings, but it can also help you save tax if your spouse has limited income. You may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less. The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above.

ADDITIONAL TAX ON SUPER CONTRIBUTIONS BY HIGH INCOME EARNERS

The income threshold at which the additional 15% (‘Division 293’) tax is payable on super $250,000 p.a. Where you are required to pay this additional tax, making super contributions within the cap is still a tax effective strategy. With super contributions taxed at a maximum of 30% and investment earnings in super taxed at a maximum of 15%, both these tax points are more favourable when compared to the highest marginal tax rate of 47% (including the Medicare levy).

GOVERNMENT CO-CONTRIBUTION TO YOUR SUPER

If you are on a lower income and earn at least 10% of your income from employment or carrying on a business and make a “non-concessional contribution” to super, you may be eligible for a Government co contribution of up to $500. In 2023, the maximum co-contribution is available if you contribute $1,000 and earn $42,016 or less. A lower amount may be received if you contribute less than $1,000 and/or earn between $42,016 and $57,016.

OWNERSHIP OF INVESTMENTS

A longer-term tax planning strategy can be reviewing the ownership of your investments. Any change of ownership needs to be carefully planned due to capital gains tax and stamp duty implications.

Please seek advice from your Accountant prior to making any changes. Investments may be owned by a Family Trust, which has the key advantage of providing flexibility in distributing income on an annual basis and an ability for up to $416 per year to be distributed to children or grandchildren tax-free.

PROPERTY DEPRECIATION REPORT

If you have an investment property, a Property Depreciation Report (prepared by a Quantity Surveyor) will allow you to claim depreciation and capital works deductions on capital items within the property and on the property itself. The cost of this report is generally recouped several times over by the tax savings in the first year of property ownership.

MOTOR VEHICLE LOGBOOK

Ensure that you have kept an accurate and complete Motor Vehicle Logbook for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2023. You should make a record of your odometer reading as at 30 June 2023 and keep all receipts/invoices for your motor vehicle expenses. Once prepared, a logbook can generally be used for a 5-year period. An alternative (with no logbook needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.

SACRIFICE YOUR SALARY TO SUPER

If your annual income is $45,000 or more, salary sacrifice can be a great way to boost your superannuation and pay less tax. By putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate you may save tax. This can be especially beneficial for employees nearing their retirement age.

PREPAY EXPENSES AND INTEREST

Expenses relating to investment activities can be prepaid before 30 June 2023. You can prepay up to 12 months of interest before 30 June on a loan for a property or share investment and claim a tax deduction this financial year. Also, other expenses in relation to your investments can be prepaid before 30 June, including rental property repairs, memberships, subscriptions, and journals.

INSURANCE PREMIUMS

Possibly your greatest financial asset is your ability to earn an income. Income Protection Insurance generally replaces up to 75% of your salary if you are unable to work due to sickness or an accident. The insurance premium is normally tax deductible, plus you get the benefit of protecting your family’s lifestyle if you cannot work due to sickness or an accident. It’s a small price to pay for peace of mind. Like rental property interest, income protection premiums can also be prepaid for 12 months to increase your deductions.

WORK RELATED EXPENSES

Don’t forget to keep any receipts for work-related expenses such as uniforms, training courses and learning materials, as these may be tax-deductible.

REALISE CAPITAL LOSSES

DEFER INVESTMENT INCOME & CAPITAL GAINS

If practical, arrange for the receipt of Investment Income (e.g., interest on term deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2023. The Contract Date (not the Settlement Date) is generally the key date for working out when a sale or purchase occurred.

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Frequently Asked Questions

ATO Tax Return Warning

Tax Deductions vs Tax Offsets in Australia

Tax Hacks, Half-Truths and What the ATO Is Watching This Tax Time

Why you should wait to lodge your tax return

What your notice of assessment means

The Importance of Lodging a Tax Return

How to use Super contributions to boost your 2023 Tax refund

How to minimise your business tax this EOFY

How to minimise your personal tax this EOFY