Side hustle, second job, working from home, investment income. If any of these changed this year, your tax return needs more than last year’s method
EOFY is a few weeks away and most Australians are already thinking about their tax return. New research from H&R Block Australia found that 77% of people describe their tax as simple, yet nearly half have been caught out by an unexpected outcome at some point, whether that is a smaller refund, an unexpected bill or a query from the ATO. The research also found that 71% had at least one factor this financial year that adds real complexity to their return.
Before you lodge, H&R Block’s Director of Tax Communications Mark Chapman says there are four questions worth sitting with first.
Did anything change in your income?
A side hustle you picked up, a second job, some investment income, a government payment, a rental property. Each of these has its own rules around how income gets declared and what you can claim against it. If any of them came into your life this year for the first time, or changed in some way, your return needs to reflect that.
Mark Chapman, Director of Tax Communications at H&R Block Australia, puts it plainly. “Nearly half of Australians have been caught out at tax time at some point, whether through a lower refund, an unexpected bill or a letter from the ATO. These moments often happen when work, income or financial circumstances change, but tax habits stay the same,” he said. It is not that people are careless. It is that life moves on and the return does not always move with it.
Did you work differently this year?
Working from home is still one of the most misunderstood areas of tax. There are specific methods for calculating those deductions and the right one depends entirely on your setup and what records you have kept. On top of that, work-related travel, study, training, tools and equipment and subscriptions may all be claimable, but only if you meet the eligibility rules and can back it up with documentation.
If your working arrangements shifted at any point during the year, even temporarily, it is worth checking whether that opens up something you have not thought to claim, or changes the way you need to calculate what you already do claim.
Did you take shortcuts?
Nearly half of Australians spent an hour or less on their last return. More than a third used a shortcut for work-related deductions, whether that was a fixed rate, last year’s method or whatever the software suggested. Among those who used the fixed-rate method, 64% chose it simply because it felt like the easiest option.
None of that is automatically wrong. But it only works when your situation has not changed. If things shifted this year and you lodge the same way you did last year, you could miss something you were entitled to claim, or end up with a return that does not actually reflect what happened. Chapman puts it this way: “If your situation has changed since last year but your approach hasn’t, you may risk leaving money on the table or facing an unexpected tax outcome.”
Is there anything you are not sure about?
Six in ten Australians feel some uncertainty after lodging and four in ten believe they have missed something in a past return. That feeling does not usually go away on its own, and it is worth paying attention to before you hit submit rather than after.
If something is unclear, whether that is around a deduction, an eligibility rule, a payment you received or how to treat a particular income stream, that is usually a sign that assumptions are doing the work where knowledge should be. Getting it looked at before lodging costs a lot less than sorting it out afterwards. “The best outcomes may not come from rushing through your return or assuming this year is the same as last year,” Chapman said. That is about as straightforward as the advice gets.
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