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Why the ATO Reviews Tax Deduction Claims
Quick answer
The ATO may review tax deduction claims if something in your tax return looks unusual, unsupported, inconsistent, incomplete, or different from the information it already has.
That does not automatically mean you have done something wrong.
It does mean the ATO may ask questions.
Common review areas include work-related expenses, car claims, working-from-home deductions, phone and internet claims, rental property expenses, donations, ABN expenses, income that does not match ATO records, and claims that are high compared with your occupation or income level.
The simple rule is this:
If you claim a deduction, be ready to prove it.
The ATO’s guide to records you need to keep explains that if your return is reviewed and you do not have evidence to support a deduction, the claim can be disallowed.
Tiny issue. Large consequences.
GoTax helps Australians complete their tax returns online, with returns checked by registered tax agents before lodgement.
Start your 2026 tax return online with GoTax
What is an ATO review?
An ATO review is when the Australian Taxation Office checks part of your tax return before or after processing.
It may be a simple check.
It may be a request for documents.
It may relate to one deduction, one income item, or several parts of the return.
A review is not always a full audit.
But it is still not something to treat casually.
Think of it like this:
| ATO action | Plain English |
|---|---|
| Data check | Something does not match ATO information |
| Review | The ATO wants to check part of the return |
| Document request | The ATO wants evidence |
| Adjustment | The ATO changes the return |
| Audit | A deeper examination of your tax affairs |
A review does not mean panic.
It means records.
Which, depending on your filing system, may still cause panic.
Why does the ATO review deduction claims?
The ATO reviews deduction claims because deductions reduce taxable income.
That means every deduction claim affects the final tax result.
The ATO wants to know whether the claim is:
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real
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work-related
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paid by you
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not reimbursed
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correctly calculated
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supported by records
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claimed in the correct year
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not private or partly private without apportionment
The ATO’s guide on how to claim deductions explains the basic deduction rule: you need to have incurred the expense, it must relate to earning income, and you need records to prove it.
That is the whole game.
Unfortunately, many people play a different game called “guess and hope”.
The ATO has seen that game before.
Does an ATO review mean you did something wrong?
No.
A review does not automatically mean you did anything wrong.
Your return may be reviewed because:
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information is missing
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ATO prefill data is incomplete
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your claim is higher than expected
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your claim differs from prior years
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your income does not match external data
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your deductions are unusual for your occupation
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your records need to be verified
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the ATO is checking a focus area
Sometimes your claim is perfectly legitimate.
But legitimate claims still need evidence.
The ATO is not asking whether you are a good person.
It is asking whether the deduction is supported.
Tax law remains emotionally unavailable.
Common reasons tax deduction claims are reviewed
ATO review triggers are not always public or predictable, but some deduction areas are naturally higher risk because taxpayers commonly get them wrong.
Common areas include:
| Area | Why it may attract attention |
|---|---|
| Work-related expenses | Claims can be high, private or poorly supported |
| Car expenses | Home-to-work travel is often incorrectly claimed |
| Working from home | Hours and methods are often poorly recorded |
| Phone and internet | Private use is often not apportioned |
| Clothing | Normal clothing is often incorrectly claimed |
| Donations | Some payments are not deductible gifts |
| Rental properties | Repairs, interest and private use are often wrong |
| ABN expenses | Private and business use can be mixed |
| No-receipt claims | Claims may lack supporting evidence |
| Repeating last year’s claim | Circumstances may have changed |
The most dangerous tax phrase is:
“I claimed it last year.”
That is not evidence.
That is a tradition.
And not every tradition deserves to survive.
1. High work-related deductions
Work-related expenses are a common review area.
The claim may be perfectly valid.
But if it is high compared with your income, occupation or prior years, the ATO may want to know why.
Examples of work-related deductions include:
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tools
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uniforms
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protective clothing
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phone and internet
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car expenses
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working-from-home expenses
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self-education
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professional memberships
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union fees
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work subscriptions
The ATO provides occupation and industry specific guides showing income, allowances and deductions that may apply to different jobs.
If your deduction claim looks unusual for your occupation, records become very important.
A deduction can be unusual and still correct.
But “unusual and unsupported” is where the trouble starts.
2. Car expense claims
Car expense claims are reviewed because many taxpayers claim travel that is actually private.
The big one is home-to-work travel.
Ordinary travel between home and your regular workplace is usually private.
The ATO’s guide to trips you can and can’t claim explains when work-related travel may be deductible.
Common problems include:
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claiming normal commuting
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claiming the full 5,000km without a basis
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using cents per kilometre and also claiming fuel
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using a weak or outdated logbook
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claiming private trips
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claiming reimbursed travel costs
For the 2025–26 income year, the cents per kilometre rate is 88 cents per eligible work kilometre.
But the 5,000km cap is not a free claim.
It is a limit.
Not a dare.
Read the GoTax guides:
Car Expense Tax Deductions Explained for 2026
Logbook vs Cents per Kilometre 2026
3. Working-from-home claims
Working-from-home deductions are another common review area.
The ATO’s working from home expenses guidance explains the methods and record requirements.
For the 2025–26 income year, the fixed rate method is 70 cents per hour.
But the hours need to be real.
Useful records may include:
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timesheets
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rosters
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diary entries
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calendar entries
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employer records
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work logs
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evidence you incurred running costs
Common mistakes include:
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estimating hours from memory
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using round numbers
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claiming every day as a work-from-home day
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claiming private home expenses
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double dipping expenses already covered by the fixed rate
“Worked from home heaps” is not a record.
It is a mood.
Read the GoTax guide: What Is the 2026 Working From Home Fixed Rate?
4. Phone and internet claims
Phone and internet claims are easy to overstate.
A phone bill proves you paid for a phone.
It does not automatically prove the work-related percentage.
Common review issues include:
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claiming 100% of a personal phone
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claiming 100% of home internet
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no usage diary
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no work-use calculation
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no separation between work and private use
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double dipping with working-from-home fixed rate claims
If you claim a percentage, be ready to explain how you calculated it.
Useful records may include:
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phone bills
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internet bills
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call records
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data usage records
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work-use diary
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four-week usage pattern
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employer communication records
Claiming 100% because your boss texted you twice is not brave.
It is arithmetic wearing clown shoes.
Read the GoTax guide: Mobile Phone & Internet Tax Deductions
5. Claims without receipts
Claims without receipts can be reviewed because the ATO may want to know how the expense was proven.
No receipt does not always mean no deduction.
But it does mean you need another way to support the claim.
Other evidence may include:
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bank statements
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credit card records
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email invoices
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supplier account history
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diary notes
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logbooks
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screenshots
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payment confirmations
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employer records
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written calculations
The ATO has a page on documents to support and verify your claims, which explains that different claims may require different supporting documents.
A bank statement can help.
But a bank statement may not show what you bought or whether it was work-related.
“Bunnings $142” could be work tools.
It could also be garden mulch and a sausage sizzle.
The ATO may want the boring details.
Read:
Can You Claim Tax Deductions Without Receipts in 2026?
What Records Does the ATO Actually Accept in 2026?
6. Normal clothing claimed as work clothing
Clothing claims can be a review problem because many taxpayers claim ordinary clothing.
Normal clothes are usually not deductible, even if you wear them to work.
The ATO’s clothing, laundry and dry-cleaning expenses guidance explains the difference between eligible work clothing and ordinary clothing.
Potentially deductible clothing may include:
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protective clothing
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occupation-specific clothing
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compulsory uniforms
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distinctive uniforms
Usually not deductible:
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ordinary black pants
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business suits
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normal shoes
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everyday shirts
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general work outfits
Your outfit being “for work” is not enough.
Otherwise half of Australia would be claiming pants.
7. Donations that are not deductible gifts
Donation claims can be reviewed where the payment was not actually a deductible gift.
The ATO’s gifts and donations guidance explains that the organisation usually needs to be a deductible gift recipient and the payment must meet the rules.
Common problems include claiming:
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raffle tickets
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fundraising chocolates
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charity auction items
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event tickets
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GoFundMe payments that do not meet the rules
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donations without evidence
Generosity is lovely.
Tax deductibility is a separate paperwork-loving creature.
If you received something material in return, the payment may not be a deductible gift.
Even if the chocolate was disappointing.
8. Rental property deduction issues
Rental property claims are a major review area because deductions can be large and the rules are often misunderstood.
Common problems include:
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claiming private use periods
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claiming repairs that are actually improvements
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claiming all interest where loans have mixed purposes
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not declaring short-term rental income
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claiming expenses when the property was not genuinely available for rent
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poor apportionment for holiday homes or shared use
Rental property records should include:
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loan statements
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interest records
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rental income statements
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property manager statements
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repair invoices
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insurance
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rates
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advertising records
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depreciation reports
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private-use calculations
Rental property tax is where “near enough” often packs a suitcase and becomes “ATO review”.
9. ABN and side income deductions
If you earn ABN income, contractor income, rideshare income, delivery income, freelance income or side-hustle income, your deductions need to match the income activity.
The expense must relate to earning that income.
Common ABN issues include:
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claiming private expenses
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not separating business and private use
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missing income
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claiming car expenses without records
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weak home office claims
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claiming equipment without business-use calculations
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not keeping invoices or bank records
Having an ABN does not turn every purchase into a business expense.
It just gives your mistakes a business name.
Read the GoTax ABN Tax Deductions Guide.
10. Income that does not match ATO data
ATO reviews are not only about deductions.
Sometimes the issue is income.
The ATO receives information from employers, banks, government agencies, share registries, managed funds, private health insurers and other sources.
If income in your return does not match information available to the ATO, the return may be delayed or reviewed.
Common missing income areas include:
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second jobs
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bank interest
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dividends
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managed fund distributions
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government payments
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ABN income
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rideshare income
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delivery income
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rental income
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sharing economy income
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foreign income
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capital gains
Do not assume prefill is complete on day one of tax time.
Prefill is helpful.
It is not a babysitter.
What happens if the ATO reviews your deductions?
If the ATO reviews your return, it may ask you to provide documents.
Those documents may include:
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receipts
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invoices
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logbooks
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diaries
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bank records
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employer records
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donation receipts
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insurance statements
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calculations
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explanations of work-related use
If the ATO accepts the evidence, the claim may remain unchanged.
If the evidence is missing or weak, the ATO may reduce or remove the deduction.
That can lead to:
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reduced refund
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tax payable
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interest
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penalties in some cases
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delays in processing
The review may be simple.
Or it may become very annoying.
Records decide which direction it tends to go.
What should you do if the ATO asks questions?
Do not ignore it.
That is not a strategy.
If the ATO contacts you, you should:
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Read the request carefully.
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Note the due date.
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Identify exactly which claim is being reviewed.
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Gather the requested records.
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Provide clear explanations.
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Do not send unrelated clutter.
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Get help if you are unsure.
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Keep copies of everything provided.
If the claim is wrong, deal with it properly.
If the claim is right, support it properly.
The ATO does not need a novel.
It needs evidence.
Preferably not written in panic.
How to reduce the chance of deduction problems
The best time to fix a deduction problem is before lodging.
Before you finalise your 2026 return, check:
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Did I actually pay the expense?
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Was I reimbursed?
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Is the expense connected to earning income?
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Is any part private?
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Have I apportioned correctly?
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Do I have records?
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Can I explain the calculation?
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Is the claim reasonable for my job?
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Am I relying on social media tax advice?
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Am I copying last year without checking changes?
The ATO is not trying to stop legitimate deductions.
It is trying to stop incorrect ones.
So the goal is not to claim less.
The goal is to claim properly.
There is a difference.
A rather expensive one.
The $1,000 standard deduction does not apply to your 2026 return
The proposed $1,000 standard deduction for work-related expenses does not apply to your 2026 tax return.
Your 2026 tax return covers the year ending 30 June 2026.
That means the current deduction and record-keeping rules still apply.
So do not stop keeping receipts.
Do not assume $1,000 is automatic.
Do not let a headline lodge your tax return.
Headlines are excellent at being loud.
They are less impressive at surviving an ATO review.
Read the GoTax guides:
$1,000 Tax Deduction 2026 Return?
Don’t Throw These Tax Receipts Away Yet
How GoTax helps reduce deduction mistakes
GoTax helps make the tax return process cleaner.
You complete your return online.
You work through deduction prompts.
You include your income and expenses.
You add claims based on your actual situation.
Your return is checked by registered tax agents before lodgement.
That helps reduce common problems such as:
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missing deductions
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claiming private expenses
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using the wrong car method
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double dipping working-from-home costs
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unsupported phone and internet claims
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weak records
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incorrect ABN deductions
GoTax does not make silly claims safe.
It helps stop silly claims before they become ATO correspondence.
Which is a much better hobby than replying to the ATO in a cold sweat.
Start your 2026 tax return online with GoTax
Quick checklist before lodging
Before lodging, check:
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work-related expenses are real
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private use has been removed
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reimbursed expenses are not claimed
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records are available
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work-from-home hours are recorded
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car kilometres are calculated
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logbook records are valid
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phone and internet use is apportioned
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donations are to eligible recipients
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tax agent fees are included where relevant
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income is complete
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ABN income and expenses are recorded
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rental property claims are supported
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nothing is copied blindly from last year
A strong return is not the one with the biggest deduction total.
It is the one that can explain itself.
Frequently asked questions
Why would the ATO review my tax deductions?
The ATO may review deductions if claims look unusual, unsupported, inconsistent, high compared with your income or occupation, or do not match information available to the ATO.
Does an ATO review mean I am being audited?
Not always. A review may be a limited check of one or more items in your return. An audit is generally more detailed.
What deductions are most likely to be reviewed?
Common review areas include work-related expenses, car expenses, working-from-home deductions, phone and internet claims, clothing, donations, rental property expenses and ABN deductions.
Can the ATO disallow my deduction?
Yes. If your deduction is not supported or does not meet the rules, the ATO may reduce or remove the claim.
What records should I keep for an ATO review?
Keep receipts, invoices, bank statements, logbooks, diaries, employer records, donation receipts, insurance records, tax agent invoices and any calculations showing work-related use.
Can I claim deductions without receipts?
Sometimes, but you still need evidence. Other records may help, such as bank statements, diary notes, logbooks, email confirmations or supplier records.
Is the $300 rule a free deduction?
No. The $300 rule is not a free deduction. You still need to have spent the money and be able to explain the claim.
Can claiming 5,000 car kilometres trigger a review?
It may be reviewed if the claim is unsupported or looks unusual. The 5,000km amount is a cap under the cents per kilometre method, not an automatic deduction.
What should I do if the ATO contacts me?
Read the request carefully, note the due date, gather the documents requested, provide clear explanations and seek help if you are unsure.
Does GoTax check deduction claims?
Yes. GoTax helps you complete your tax return online, and returns are checked by registered tax agents before lodgement.
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.
General Information Disclaimer
This article provides general information only and does not take into account your personal circumstances. Tax law can change and deduction eligibility depends on your income, occupation, records and specific facts. If you are unsure, seek advice from a registered tax agent.
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