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Tax refund time: Top 10 common deductions people forget to claim
Tax refund season is peaking for millions of Australians but many are missing out on money because they forget common deductions.
New figures from the Australian Taxation Office show that as of July 31, more than four million people had lodged their 2024-25 tax return – still a small proportion of the 14 million-plus people who lodge annually.
'More than 2.6 million individual refunds have been issued, totalling more than $6.6bn, with an average refund of $2548,' an ATO spokeswoman said.
Tax specialists say the peak period for tax returns is between mid-July and September, and note that some deductions are commonly forgotten – particularly among people who prepare their own return.
While more than 2.5 million self-preparers already have lodged, it's possible to amend previously-filed tax returns. Chartered accountant and Mr Taxman founder Adrian Raftery said this could be done through the ATO website or a tax agent.
Here are 10 deductions that experts say are commonly forgotten at tax time. 1. Income protection insurance
Unlike other life insurance products, premiums for income protection insurance are tax-deductible if the policy is held outside of superannuation.
Dr Raftery said income protection cover could cost thousands of dollars a year.
'It's an automatic debit that comes out of their bank account, and it's a different item in the tax return so it's not front and centre of their work-related expenses,' he said. 2. Home office items
Anti-virus software, Microsoft 365 subscriptions, computer accessories, USB sticks, stationery and other one-off or annual expenses could easily be missed, Dr Raftery said.
He said poor record-keeping was an issue. 'People forget about things they spent money on in July and August last year.' 3. Working from home
The ATO allows people to claim a deduction based on hours worked from home, called the fixed-rate method, which is 70c per hour and includes phone usage, internet, electricity and gas, stationery and computer consumables
However, each hour worked must recorded in a diary.
H&R Block director of tax communications Mark Chapman said while working from home was a common deduction, 'people forget to keep the substantiation, which means that they can't claim it'. 4. Handbags
Mr Chapman said handbags were an occupation-specific deduction that was often missed.
'Many people don't realise you can claim a handbag on your tax return if it's used for work to carry a laptop or papers,' he said.
'And sunscreen if you work outside – it's claimable if you do work outside, but people often haven't kept the receipt.' 5. Uniforms
'If you have got tax-deductible, work-related clothing you can also claim the cost of laundry or dry cleaning,' Mr Chapman said.
'Dry cleaning is often an expensive process.'
The ATO says you cannot claim for everyday clothing such as suits or casual clothes, but can claim for occupation-specific uniforms, protective clothing and compulsory work uniforms with logos. 6. Receipts
This may be the most important forgotten element, because record-keeping is a must.
'If you haven't got the receipt, that's pretty fatal for most deductions,' Mr Chapman said. 7. Superannuation
'People pay into super with the intention of claiming a tax deduction, but what they often forget to do is all the paperwork that surrounds it,' Mr Chapman said.
'You have to send your super fund a notice of intent to claim a tax deduction form and the super fund must reply.
'We get a lot of people who had put money into super but did it too late, or don't have the paperwork to back up the superannuation contribution. Some people misunderstand the rules and try to pay in July, August or September.' 8. Donations
'Charitable donations is a common one – people often don't think to claim them,' Mr Chapman said.
'You can claim a deduction if you have donated in excess of $2 to a charity which is a deductible gift recipient, which most charities are.' 9. Financial advice
Dr Raftery said the tax-deductible portion of financial advice fees was a new measure introduced in 2024-25 and could be missed.
'Some of that may extend from financial planners not knowing about it,' he said. 10. Investment expenses
Interest paid on margins loans for shares and investment property mortgages was an area Dr Raftery often reminded clients to claim.
Land tax and landlord insurance were other expenses commonly forgotten by property investors, he said.
Dr Raftery said another big miss was depreciation, as people either ignored it or did not understand the rules, where depreciation could not be claimed for fixtures and fittings in second-hand property purchases but still applied to new properties, while capital works deductions remained for all properties – typically 2.5 per cent a year of construction costs.
'Probably half of new property buyers now do get a depreciation schedule but the other half don't – that can be a $15,000 tax deduction over the year.' Making amendments
Dr Raftery said people could change a tax return up to two years after it was assessed.
However, this could be a potential red flag to the ATO, he warned. 'Just be doubly certain that you have excellent record keeping with your receipts and logbooks.' Read related topics: TaxWealth Anthony Keane Personal finance writer
Anthony Keane writes about personal finance for News Corp Australia mastheads, focusing on investment, superannuation, retirement, debt, saving and consumer advice. He has been a personal finance and business writer or editor for more than 20 years, and also received a Graduate Diploma in Financial Planning. Personal Finance
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