The risks of cheating on your tax return.
At the moment, more than 15 million Australians are preparing their tax returns—if they haven’t already. Around 60% will use an accountant, while the rest will lodge through their MyGov account. Whatever method you use to lodge your return, the ATO is doing their due diligence. But, even with the ATO heavily scrutinising every claim, people are still tempted to cut corners. Some even willingly attempt to cheat the system, hoping not to get caught…
Did you know the ATO receiving around 1,000 tip-offs regarding illegal tax returns every week? They investigate around 90% of them.
It’s never been more important to get things right. Here’s what to keep in mind this year.
Preparing your return.
These days, the ATO prefills much of your income information, from wages to some bank interest and dividends. You’ll know your income statement is “tax ready” when your MyGov account confirms it.
But don’t rush to lodge on July 1. Other items—like managed fund distributions, bank interest, and private health insurance—may take longer to appear. Always check prefilled data for accuracy and add in any missing information such as:
- Capital gains from investments.
- Income from a second job or contracting work.
- Overseas income.
- Rental income.
Some details are only partially prefilled, so double-check that all questions are answered before submitting.
Claiming deductions.
To claim a deduction, three rules apply:
- You must have spent the money yourself (and not been reimbursed).
- The expense must be directly related to earning your income.
- You must have a record to prove it—a receipt or diary entry.
The ATO’s myDeductions app is a handy way to store and organise receipts.
ATO Focus Areas for 2025.
Each year, the ATO highlights specific areas it will scrutinise. For 2025, these are the big four:
1. Working from home expenses.
Two methods apply here.
- Fixed-rate method – claim 70c per hour worked from home. Covers energy, phone, internet. Requires a record of hours, but no receipts.
- Actual-cost method—claim the real costs of a dedicated office space. Requires receipts and no private use of the area.
Remember: you can’t claim home loan interest or rent unless you’re running a business from home, and personal items (like coffee machines) are not deductible.
2. Motor vehicle expenses.
Again, there are two options here to work out your motor vehicle expenses. Please note, you can’t combine these methods.
- Logbook method—keep a 12-week record to calculate business use %. Apply this to expenses.
- Cents per kilometre method—claim 88c per km up to 5,000km. No receipts required, but you must justify your claim.
3. Rental properties.
Interest deductions apply only to the rental property loan, not your personal home. You can only claim your share of expenses (e.g. 50% ownership = 50% of costs). If you have a holiday home, this is only deductible for the period it was genuinely rented out.
4. Cryptocurrency & gig economy income.
Buying, selling, or swapping crypto triggers capital gains or losses that must be declared. Income from gig work, rideshare driving, food delivery, or online sales must also be included.
Don’t be tempted to cheat.
The ATO uses advanced data matching across banks, employers, share registries, and even internet platforms. If claims don’t line up, expect questions. Penalties for false claims range from 25% to 75% of the tax owed. Some of the stranger (and rejected) claims in recent years include:
- Lego, school uniforms, and kids’ sporting gear.
- $9,000 worth of wine consumed on a holiday.
- A conference claim for an event the taxpayer didn’t attend.
If your claim doesn’t directly relate to earning income, don’t even try it.
If you make a mistake…
Mistakes happen—the ATO realises this. If you realise something’s wrong, you can amend your return through myTax. The ATO generally won’t penalise you if you’ve taken reasonable care, but you will need to repay any shortfall.
Additionally, mistakes can mean your accountant will have to liaise with the ATO on your behalf. This comes with additional fees for their time.
Lodgement dates.
The deadline for lodging your own return is 31 October 2025.
If you’re using a registered tax agent like Ascent Accounting, you’ll usually have longer to lodge—even up until the 15th May 2026. This is provided you’re on their books before the cut-off, you’re not a high-income earner, and you don’t have a bad lodgement history.
Get your 2025 tax return right with professional support.
Tax time can feel overwhelming, but you don’t have to go it alone. We’ll help you identify every deduction you’re legitimately entitled to and make sure your return is accurate and compliant.
If you’d like professional support preparing your 2025 tax return—and maximising your outcome—talk to us today.
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