Common Misconceptions When Completing Your Tax Return

Australian taxpayers take great pride in being creative in claiming tax deductions to beat the taxman, but under our Self-Assessment Tax System it is the taxpayer who will be penalised when claiming incorrect tax deductions.

Taxpayers can claim 'anything within reason' in their tax return and the refund will be issued, but if the claims are found to be incorrect, the taxpayer will be required to repay the tax avoided, plus pay interest on incorrect claims of about 7% per annum. If the ATO believes that the taxpayer has acted carelessly, a penalty between 25% and 95% of the tax avoided may also be charged.

H&R Block has produced this guide to help taxpayers only claim what they are entitled to, and to get their tax returns correct, before they lodge them. We've also pulled together a few FAQ's based on real-life client situations to help taxpayers get it right.

Declare all your income

The ATO now receives details of your income information electronically from most institutions that pay interest and dividends, foreign income from overseas tax offices, payment summaries from employers and pension payments.

This information is used to match income declared in tax returns. If the income declared is not the same as the income matched, the ATO will write to you seeking an explanation.

If it is found that you have under declared your income, the ATO will issue an amended assessment and will charge interest of about 7% on any underpaid tax. In addition, the Tax Office will typically impose a 25% culpability penalty for "failing to take reasonable care'. Do it again the penalty can add up to 50% of the tax avoided.

Be careful with self-education deductions

You need to be sure that the education undertaken has the necessary connection to the income you are currently earning, otherwise the deduction is not allowable. You can't claim a self-education deduction if you are undertaking a course to open up a new line of employment. Read more about claiming self-education deductions.

Get your Home Office claim right

You are not entitled to claim a percentage of rent or the interest on a mortgage if you are using your home as a home office to do work at home after hours. You can either claim a deduction for home office based on actual costs or you can claim a set rate per hour (currently 67 cents) to cover running costs such as heating, electricity, telephone, internet, stationery and computer consumables. Find out more about claiming home office expenses.

Car expenses

You need to have the necessary records to substantiate your claim:

• log book, receipts and invoices if you use the logbook method
• actual record of kilometres travelled (diary or similar records) if you are claiming the per kilometre method

Read more about claiming car expenses

Need help?

If you have any questions or would like help with your tax return, use our office locator to find your local H&R Block office and book an appointment online.

Tax Frequently Asked Questions

Can I claim tax deductions for items that I use part for work and part personally?

Yes, but you are only entitled to claim that part of the expense that directly relates to your job.

Can I claim for my mobile phone/home phone and laptop?

Yes, if you use them for work and your employer doesn't reimburse you. You will need to keep a log of the calls over a four week period so you can pick up the costs from your itemised bill and calculate a work percentage to apply over the whole year.

I work in a fashion shop and my employer requires me to buy and wear clothes from the shop whilst working, therefore can I claim these costs?

There is no claim as the clothes are of a conventional nature.

I work as an employed chef and I go to a different restaurant each week to see what our competitors do. Can I claim these costs?

This claim is not allowable as the expense is of a private and domestic nature since there is a tenuous relationship between the expense and the current income.

I work in a bottle shop and I purchase products so I can talk to the customers who ask questions on various products. Can I claim these costs?

This claim is not allowable as the expense is of a private and domestic nature since there is a tenuous relationship between the expense and the current income.

I do some work at home in my home office; it is 20% of the area of the house so can I claim 20% of the rent or mortgage?

The rules specifically exclude such a claim, the home office deduction rules limit claims to the outgoings in relation to the home office, heating, electricity and depreciable costs of desks, computers, carpets, chairs, filing cabinets and bookshelves.

I work for a travel agent, and during my holidays I travel to various tourist sites that I discuss with clients at work. Can I claim these costs?

This claim is not allowable as the expense is of a private or domestic nature. There is a tenuous relationship between the expense and the current income.

I work as a retail pharmacy assistant part time, whilst studying full-time for my Pharmacists degree. Can I claim my education costs?

This claim is not allowable as the education is designed to open up a new field of employment and does not relate to the current income earning activities

I work in the advertising industry and as our clients advertise on Pay TV, can I claim my subscription costs in my tax return?

This claim is not allowable as the expense is of a private or domestic nature. There is a tenuous relationship between the expense and the earning of your income.

I live in the country, without public transport, so can I claim the costs of parking my car in a car park near work?

The costs of driving and parking to get to work are a private expense and are not deductible.

My only income is from salary and wages. I made a personal superannuation contribution to my superfund. Can I claim that amount as a deduction on my tax return?

Yes, you can make additional concessional contributions and claim an income tax deduction for doing it. There is a limit to how much you can put into super each year as concessional contributions. This is called the 'concessional contributions cap'. Your concessional contributions include the total of your employer's super guarantee contributions (11% for the 2024 year, 11.5% for the 2025 year), your salary sacrificed contributions and the contributions you have made to your super fund for which you are claiming a tax deduction. The concessional contributions cap for the 2022, 2023 and 2024 years is $27,500. For the 2025 year this cap will increase to $30,000.  If your total superannuation balance is less than $500,000 on 30 June and you have unused concessional cap amounts from previous years, you may be able to contribute more thant the general concessional contributions cap. If you want to claim a tax deduction for your super payment, it must be made by June 30th and you need to advise your super fund that you've made the payment by the time you lodge your tax return. H&R Block or your super fund can give you guidance on how to complete the form and how much you are able to contribute to your super.

I was provided a company car. I need to wash the car regularly before going to see the clients. Can I claim the car wash expenses on my tax return?

The claim is not allowable as the expense is of a private and domestic nature.

I am an actor. Can I claim the costs of tickets to go to the cinema and theatre?

This claim is not allowable as the expense is of a private or domestic nature. There is a tenuous relationship between the expense and the current income.

I bought a $50 raffle ticket. Can I claim it as a donation on my tax return?

This claim is not allowable as it is not truly a gift since it provides a benefit (the possibility of a prize) for you. You can only make tax deductible donations to organisations that have the status of deductible gift recipients (DGRs). The receipt (in your name) must generally also be kept if the donation is more than $2. However, if you made one or more small cash donations, each of $2 or more, to bucket collections – for example, to collections conducted by a DGR for natural disaster victims – you can claim a total tax deduction of up to $10 for those donations for the income year without a receipt.

June 2024