Five simple ways to maximise your tax refund

Tax time used to be all about gathering records. It still is to a fair degree, though these days the tax office can access plenty of details through electronic data matching, as well as your employer's single touch payroll (STP) system.

It's important to ensure the information the ATO has about you is accurate (more on this shortly). However, the focus here is more about making the most of deductions and boosting your tax refund.

With this in mind, here's how to get on the right track:

1. Claim what you're entitled to

Chances are you can claim a range of work-related deductions. The golden rule is that any expenses must directly relate to earning your income.

"If you have incurred a work-related expense, and you have the paperwork to prove it, don't hesitate to claim it", says Mark Chapman, director of tax communications at H&R Block Australia and Money columnist.

There is a surprising range of deductions up for grabs. The ATO has an online library of guides that set out the possible deductions for workers in 40 occupations.

Exotic dancers in the adult entertainment industry, for example, can claim a deduction for the cost of stage make-up. Bus drivers can claim the cost of a heavy vehicle permit (though not the cost of their regular driver's licence).

Hospitality workers can claim for washing, drying and ironing clothing worn at work as long as it is either protective (such as an apron) or occupation specific (a chef's checked pants or a uniform registered by your employer).

The ATO says a reasonable cost for laundry claims is $1 per load if it only contains work clothing or 50 cents per load if private clothing is thrown in.

2. Resist the urge to exaggerate

"You can only claim what you've spent," cautions Chapman. "Don't inflate deductions in order to get a bigger refund, and only claim costs you can prove you spent by producing an invoice, receipt or bank statement."

There's a good incentive not to fudge any deductions. If claims are found to be incorrect, you may be required to repay the tax avoided as well as interest (currently 11.17%) on the tax shortfall.

If the ATO believes you have acted carelessly, Chapman says a penalty between 25% and 95% of the tax avoided may also be charged.

Jenny Wong, tax lead at CPA Australia, adds: "You should be in the habit of keeping all relevant receipts and records and keeping logbooks of your work activity to make the most comprehensive claims. Claiming all the work-related deductions you're entitled to could notably increase your refund or reduce your overall tax bill. So, it pays to be patient and get it right."

Wong agrees that it's important to avoid exaggerating claims.

"The ATO uses data-driven profiles based on things like employment type and financial investments to identify where some people may be pushing the boundaries of what they're entitled to claim.

"If your claims are disproportionate to what the ATO would expect from someone in a similar profession to you, or with similar financial investments, you may be asked to provide additional evidence."

3. Check the basics

Lots of tax returns get held back because of basic mistakes.

Mark Chapman says there are a few common errors to watch for:

Name or address changed?

If you've moved or changed your name, tell the ATO before you lodge your tax return. If you lodge under different details, the ATO won't be able to match it with your tax file number, and you can expect delays.

Haven't included your bank account details?

From January 1, 2025, the ATO has discretionary power to retain refunds for up to 90 days if you don't provide personal bank account details. After 90 days, your refund will be paid as a cheque, though this will take a lot longer than a transfer.

Spelling mistake?

A simple slip of the keyboard, such as adding an extra letter to your name, can see your tax return consigned to an ATO black hole, while ATO staff try to manually match your details. Double-check everything to make sure all details are correct before lodging.

4. Don't rush into it

"There's a misconception that lodging early means you'll receive your tax refund first. But it's not as simple as that," says Wong.

It can take time for pre-filled data to reach the ATO.

In 2024, it wasn't until July 30 that the tax office gave the green light for taxpayers with simple affairs to lodge their return.

"If the ATO asks you for additional information or you get things wrong, it may hold up your refund, or you could have to essentially re-lodge your return altogether," cautions Wong.

Long story short: take it slow and get your return right the first time.

5. Ignore the dodgy advice

"You only need to spend a few minutes on YouTube or TikTok to find some dodgy tax advice," says Wong.

"Just because someone has thousands of followers doesn't mean they know what they're talking about."

It's best to stick to the advice of a registered tax agent.

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