Goodbye receipts, hello $1000: The future of tax returns is coming

Sydney Morning Herald

12-07-2025

If at this point you're freaking out and worrying that you're set to lose money or get a lower return than previously, fear not. If you are someone who claims more than $1000 in deductions come tax time (which is about 60 per cent of people), the current model will still be in place and little will change for you.
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But make no mistake – this will be a big change for a huge chunk of people. According to the ATO, about 39 per cent of Australians claim less than $1000 in work expenses each year. In moving to an automatic deduction model, the government estimates it could simplify the tax process for 5.7 million people – the vast majority of whom (88 per cent) have a taxable income of $135,000 or less.
For its part, the ATO estimates the move to an automated model won't just make the historically confusing and time-consuming process easier, but also much faster. So much so that this method would require just six steps, meaning you could comfortably lodge a return in under half an hour and still get the same return you otherwise would. By all accounts, that sounds pretty good to me.
But even though this might be the first time you're hearing about it, the idea of automated deductions isn't itself new. In fact, it was first raised by former Treasury secretary Ken Henry all the way back in 2010.
Fifteen years ago, Henry and the Department of Treasury noted: 'For many people, the personal tax system is complex not only because of the rates scale and the lack of a coherent definition of taxable income, but also because they must deal with a large suite of complex dedication rules, numerous tax offsets and a variety of exempt forms of income.'
The complexity Henry spoke of also points to a bigger issue at play, which is the number of Australians paying professionals to help them lodge their annual tax returns.
Don't get me wrong, there are lots of legitimate reasons for needing, or wanting, to pay someone to help you ensure you not only lodge your tax statement correctly, but that you maximise your potential return. If you work several jobs, are self-employed, or receive income from investments, for example, a tax specialist can be of great help.
But for the average worker who has a single source of full-time employment and wants to claim standard deductions, even if they are more than $1000, a tax agent simply isn't needed any more.
And yet, the ATO says, of the 15.7 million returns lodged last year, 60 per cent (9.5 million) were lodged by tax agents. If using an agent guaranteed us all mega-returns beyond our wildest dreams, maybe it would be worth it. But the average return for the same financial year was about $2900, and the average fee for a tax accountant ranges anywhere from $100 to $500.
Yes, there are still many complexities in our tax system, and it can be confusing to navigate. But spend five minutes on the ATO app or their online myTax tool, and you'll see that a once overly complicated process has become a lot easier and much more streamlined.
What's more, the ATO has gotten a lot better at auditing claims thanks to AI and data matching tools. Every year, the Tax Office is auditing people more regularly and consistently, and finding bogus claims – like the truck driver who tried to claim a pair of Speedos, or the mechanic who tried to claim a gaming console and TV (among other things).
If you're among the small fraction of people who treat deductions like a sport of what you can get away with, things are only getting tougher. But if you are among the 39 per cent of Australians who claim less than $1000 in deductions, things are set to become a lot easier (and merrier).
Victoria Devine is an award-winning retired financial adviser, bestselling author and host of Australia's No.1 finance podcast, She's on the Money. She is also founder and director of Zella Money.