ABN Tax Return Mistakes That Cost Refunds

Quick answer

ABN tax return mistakes can reduce your refund, delay your return, create a tax bill, or attract ATO questions.

The most common mistakes are usually simple:

• not declaring all ABN income

• claiming private expenses

• guessing deductions

• not keeping records

• claiming car expenses incorrectly

• getting home office claims wrong

• ignoring GST

• missing personal services income issues

• treating ABN income like wages

• forgetting that tax may not have been withheld

An ABN tax return is not hard because the idea is hard.

It is hard because people mix business income, private spending, car use, phone bills, home internet, receipts, GST and hope into one tax return.

Hope is not a tax method.

GoTax helps ABN workers, sole traders, contractors, freelancers, self-employed workers and rideshare drivers complete tax returns online, with returns checked by registered tax agents before lodgement.

Start your ABN tax return online with GoTax

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Mistake 1: Not declaring all ABN income

This is the biggest mistake.

If you earned income through your ABN, it generally needs to be included in your tax return.

ABN income may include:

• invoices paid by clients

• contractor payments

• freelance income

• cash payments

• bank transfers

• platform income

• rideshare income

• delivery income

• online marketplace income

• side hustle income

• labour hire income

• business income

• personal services income

Do not leave income out because:

• it was paid in cash

• it went into a personal bank account

• it was a small amount

• the client did not ask for an invoice

• you forgot about it

• it was “just a side hustle”

• no tax was withheld

• you thought the ATO would not know

That last one is a bold strategy.

Not a good one.

The ATO receives more data than people think.

If the income exists, include it.

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Mistake 2: Thinking ABN income is tax-free

ABN income is not tax-free.

In many cases, contractors and sole traders are paid gross.

That means the payer may not withhold tax before paying you.

Employees usually have tax withheld from wages during the year.

ABN workers often receive the money first and deal with the tax later.

That is why ABN workers often get tax bills.

It does not always mean the return is wrong.

It may mean the tax was not taken out earlier.

Example:

Worker type	What usually happens
Employee	Tax is withheld from wages during the year
ABN worker	Often paid gross and tax is calculated later
Contractor	May need to set money aside for tax
Sole trader	Business profit is included in the individual tax return

The invoice money is not all spending money.

Some of it may belong to the tax bill.

The ATO does not mind waiting.

It charges interest and remains emotionally stable.

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Mistake 3: Claiming private expenses

Having an ABN does not make private costs deductible.

Private expenses may include:

• groceries

• rent for ordinary living

• family phone bills

• ordinary clothing

• private car trips

• school costs

• family holidays

• private meals

• entertainment

• personal subscriptions

• private insurance

• gym memberships

• household furniture

• personal grooming

• streaming services

• weekend projects

A private expense stays private.

Even if you are stressed about business while paying for it.

Even if you paid from the business account.

Even if you kept the receipt.

A receipt proves you spent money.

It does not prove the expense belongs in the tax return.

Very annoying.

Also true.

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Mistake 4: Not splitting business and private use

Many ABN expenses are mixed-use.

That means part business, part private.

Common mixed-use expenses include:

Expense	Common issue
Phone	Business and private calls
Internet	Business and household use
Car	Work trips and private driving
Laptop	Business work and personal use
Home office	Business use and household use
Tools	Paid jobs and private home projects
Software	Business and personal use
Camera	Client work and private photos

You can generally claim only the business-use portion.

Example:

Expense	Total cost	Business use	Claim
Phone	$1,200	40%	$480
Internet	$960	50%	$480
Laptop	$1,800	70%	$1,260 business-use portion
Car costs	$8,000	60%	$4,800

Do not claim 100% because the item is “used for business”.

That is only half the question.

The other half is:

What private use needs to be removed?

Read the GoTax guide: Sole Trader Expenses: Business vs Private Use

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Mistake 5: Guessing deductions

Guessing deductions is not record keeping.

It is imagination with a calculator.

Common guesses include:

• “about 80% business use”

• “probably 5,000km”

• “roughly half the internet”

• “most of the phone”

• “I used the laptop for work”

• “I spent heaps at Bunnings”

• “I know I had receipts somewhere”

• “same as last year”

The tax return needs a reasonable basis.

That may include:

• invoices

• receipts

• bank statements

• usage records

• work diaries

• logbooks

• odometer readings

• appointment records

• client records

• job sheets

• platform statements

• business calendars

• supplier invoices

• home office hours

A good deduction is not just a number.

It is a number with evidence.

Less exciting.

More useful.

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Mistake 6: Claiming car expenses incorrectly

Car claims are one of the biggest ABN tax return traps.

Common car mistakes include:

• claiming private driving

• claiming home-to-work travel incorrectly

• claiming 5,000km automatically

• using the cents per kilometre method with no basis

• claiming fuel on top of cents per kilometre

• using an old logbook when work patterns changed

• claiming 100% business use without support

• forgetting family use of the car

• no odometer readings

• no job or trip records

For the 2026 tax return, the cents per kilometre method may be available for eligible business kilometres, but the cap is not automatic.

You need to have business kilometres.

You need a basis for them.

The car does not become deductible because it once drove near a client.

That is not how cars work.

That is not how tax works either.

Read: Can I Claim My Car With an ABN?

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Mistake 7: Getting home office claims wrong

Home office deductions can be useful for ABN workers.

They can also get messy quickly.

Common mistakes include:

• claiming all household internet

• claiming rent automatically

• guessing work-from-home hours

• claiming electricity without a calculation

• ignoring private household use

• claiming furniture used privately

• not keeping home office records

• confusing running expenses and occupancy expenses

• ignoring possible capital gains tax issues where occupancy expenses are claimed

Working from home does not make the whole home deductible.

A desk in the spare room is not the same as turning the home into a commercial office.

A laptop at the kitchen bench does not make the kitchen a business premises.

It may make dinner difficult.

Different issue.

Read: Home Office Claims for ABN Workers

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Mistake 8: Ignoring GST

GST is separate from income tax.

That is where people get caught.

Your ABN tax return deals with income tax.

GST is usually dealt with through BAS if you are registered or required to be registered.

You may need to think about GST if:

• your GST turnover reaches the registration threshold

• you are close to the threshold

• you issue tax invoices

• you charge GST

• you claim GST credits

• you lodge BAS

• you provide rideshare or taxi-style passenger services

• your business income is growing

For many businesses, the GST registration threshold is $75,000.

Rideshare and taxi-style passenger travel has special GST rules.

If you drive rideshare, do not assume the normal turnover threshold is the whole story.

That is how GST becomes less of a tax issue and more of a nasty surprise.

Use the GoTax Rideshare Tax Return page if you earn rideshare income.

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Mistake 9: Mixing GST and income tax records

GST and income tax are related, but not the same.

If you are registered for GST, your records need to be handled carefully.

Common mistakes include:

• including GST incorrectly in income

• claiming expenses without separating GST

• mixing BAS figures and income tax figures

• losing tax invoices

• treating gross bank deposits as taxable profit

• forgetting that GST collected is not really yours

• claiming GST credits without proper records

• ignoring BAS lodgements

A business can make a profit and still have GST obligations.

A business can have GST obligations and still owe income tax.

This is why contractors and sole traders need clean records.

Otherwise the numbers begin fighting each other.

Numbers are quiet until tax time.

Then they become dramatic.

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Mistake 10: Ignoring personal services income

Personal services income, or PSI, can apply where income is mainly a reward for your personal efforts or skills.

This may affect:

• contractors

• consultants

• IT workers

• engineers

• designers

• trainers

• project managers

• labour hire workers

• freelancers

• professional service providers

PSI can affect how income is reported and what deductions may be available.

Having an ABN does not automatically remove PSI issues.

Having a company, trust or partnership does not automatically solve PSI either.

If the income is really for your personal labour or skills, check the PSI position.

Ignoring PSI because it sounds technical is understandable.

Still risky.

Tax problems do not become smaller because the acronym is boring.

Read the GoTax guide: Contractor Tax Return 2026: What to Know

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Mistake 11: Thinking a side hustle does not count

A side hustle can still be taxable.

This may include income from:

• freelance work

• online selling

• delivery driving

• rideshare driving

• consulting

• tutoring

• content creation

• trade jobs

• hobby-like activity that has become business income

• marketplace platforms

• paid services outside normal employment

The issue is not whether you call it a side hustle.

The issue is whether it is income that needs to be declared.

If you earned money from ABN or business activity, it may need to go in the return.

Calling it “just a little thing I do on weekends” does not make it invisible.

The ATO has weekends too.

Probably.

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Mistake 12: Forgetting income where no tax was withheld

Some ABN workers receive income where no tax is withheld.

That can include:

• client invoice payments

• cash jobs

• platform income

• freelance income

• contractor payments

• side-hustle payments

• business sales

This income still needs to be included.

The mistake is thinking:

No tax was withheld, so maybe it is not taxable.

Wrong direction.

Usually it means:

No tax was withheld, so I may need to pay tax later.

Different sentence.

Much worse mood.

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Mistake 13: Treating all deposits as profit

Business bank deposits are not always profit.

They may include:

• sales income

• GST collected

• loan funds

• transfers from another account

• reimbursements

• refunds

• private money introduced

• client deposits

• owner contributions

At the same time, not every withdrawal is deductible.

Withdrawals may include:

• business expenses

• private drawings

• GST payments

• tax payments

• loan repayments

• transfers

• personal spending

This is why records matter.

Your bank account tells part of the story.

Your tax return needs the whole story.

A bank feed with no explanation is like a detective novel with half the pages missing.

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Mistake 14: Missing deductions you are entitled to claim

Some people go too hard with deductions.

Others underclaim.

Common missed ABN deductions may include:

• tax agent fees

• accounting fees

• business software

• payment platform fees

• bank fees

• website costs

• advertising

• business insurance

• business subscriptions

• professional memberships

• protective equipment

• tools

• home office running expenses

• phone and internet business use

• business car travel

• training linked to current income

• stationery

• invoicing software

The goal is not to claim everything.

The goal is to claim what is genuinely allowable and supported.

A proper ABN tax return should avoid both extremes:

• wild claims

• scared underclaiming

Neither is ideal.

One annoys the ATO.

The other annoys your wallet.

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Mistake 15: Not keeping records for five years

ABN workers should keep proper records.

Generally, tax records need to be kept for five years.

Useful records include:

• invoices

• receipts

• bank statements

• credit card statements

• platform reports

• BAS records

• GST records

• logbooks

• odometer readings

• home office records

• phone bills

• internet bills

• software invoices

• equipment receipts

• insurance records

• business contracts

• job records

• client records

Keep records even after the return is lodged.

Lodged does not mean forgotten.

It means lodged.

The ATO can still ask questions later.

Very inconvenient.

Very possible.

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Mistake 16: Using the wrong GoTax return type

ABN income usually needs the right return pathway.

Do not choose a simple wage return if you have ABN business income.

You may need one of these:

Your situation	GoTax page
General ABN income	ABN Tax Return
Contractor income	Contractor Tax Return
Freelance income	Freelancer Tax Return
Self-employed income	Self-Employed Tax Return
Small sole trader business	Small Business Tax Return
Rideshare or delivery income	Rideshare Tax Return

Choosing the right pathway matters.

It helps the return ask the right questions.

The wrong return type is like bringing a fork to soup.

Technically possible.

Mostly messy.

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ABN tax return checklist before lodging

Before lodging your ABN tax return, check:

• Have you declared all ABN income?

• Have you included cash income?

• Have you included platform income?

• Have you included contractor income?

• Was any tax withheld?

• Did you remove private expenses?

• Did you apportion mixed-use expenses?

• Are car claims supported?

• Are home office claims supported?

• Are phone and internet percentages reasonable?

• Do you need to consider GST?

• Are PSI issues relevant?

• Do your records support your deductions?

• Have you kept invoices and receipts?

• Are your bank records consistent?

• Are you using the right GoTax return type?

If you are unsure, sort it before lodging.

It is easier to fix the return before lodgement than to explain it after the ATO asks.

That is not just tax advice.

That is life advice wearing a cardigan.

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How GoTax helps

GoTax helps ABN workers complete tax returns online.

The system prompts you through relevant income and deduction areas, and your return is checked by registered tax agents before lodgement.

That can help with:

• ABN income

• contractor income

• freelancer income

• side-hustle income

• rideshare income

• car claims

• home office claims

• phone and internet

• business/private-use splits

• GST awareness

• PSI awareness

• missing records

• common deduction traps

• choosing the right return type

GoTax does not make unsupported claims safe.

It helps you lodge properly.

That is the point.

Start your ABN tax return online with GoTax

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Frequently asked questions

What is the biggest ABN tax return mistake?

The biggest mistake is usually not declaring all ABN income or claiming deductions without proper records.

Do I need to declare small ABN income?

Yes, ABN or business income generally needs to be included in your tax return, even if the amount is small.

Can I claim private expenses if I have an ABN?

No. Private expenses are not deductible just because you have an ABN.

What if an expense is partly business and partly private?

You generally claim only the business-use portion. The private part should be excluded.

Can I claim 5,000km automatically with an ABN?

No. The 5,000km cap under the cents per kilometre method is not automatic. You still need eligible business kilometres and a reasonable basis for the claim.

Why did my ABN tax return create a tax bill?

Many ABN workers are paid without tax withheld during the year. Tax may become payable when the return is lodged.

Do ABN workers need to keep receipts?

Yes. ABN workers should keep receipts, invoices, bank records and other evidence to support income and deduction claims.

Do I need to register for GST with an ABN?

You may need to register for GST if your GST turnover reaches the registration threshold. Some activities, including ride-sourcing, have special GST rules.

Can GoTax help avoid ABN tax mistakes?

Yes. GoTax helps ABN workers, contractors, freelancers, self-employed workers and rideshare drivers complete tax returns online, with returns checked by registered tax agents before lodgement.

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About the Author

Written by Mark Walmsley, Chartered Accountant and Registered Tax Agent.

GoTax helps Australians complete their tax returns online, with returns checked by registered tax agents before lodgement.

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General Information Disclaimer

This article provides general information only and does not take into account your personal circumstances. Tax law can change and ABN tax treatment depends on your income, business activity, GST position, PSI position, deductions, records and specific facts. If you are unsure, seek advice from a registered tax agent.