Tax Time Misinformation: How to Check Advice Before You Act

ATO Warning — Tax Time 2026

Tax Time brings a surge of deduction tips, refund claims and tax “hacks” across social media, online forums and AI tools.

The ATO is warning: Your tax return isn't the place for guesswork. One piece of bad advice can cost you thousands in penalties, interest and compliance action. Some information may be accurate in a particular situation but incomplete, outdated or unsuitable for yours. Before including a claim in your return, check the source, the applicable income year and the records required to support it.

The sources

Social media, forums, AI tools or advice from friends and family

The promise

A larger refund, deduction or shortcuts, ways to pay less tax

The reality

Eligibility rules, records, private-use adjustments and recent rule changes

Why GEneral Tax Tips cAN BE INCOMPLETE

What's happening right now:

The ATO is seeing a rise in tax-related "tips", "hacks" and advice being shared online—especially on TikTok, Instagram, Reddit and through AI platforms. Much of it promises bigger refunds, shortcuts or ways to pay less tax.

The problem: Most of it is either wrong or incomplete. It works in one person's situation but not yours. Or it's outdated—rules changed, but the tip is still circulating.

Who's pushing it:

📱

Social media "finfluencers"

With no qualifications

🤖

AI platforms

That generate plausible-sounding but inaccurate advice

👥

Friends and family

Who got a bigger refund and are sharing what they did

⚠️

Unqualified advice

Who make money from aggressive claims

The people sharing it rarely say: "I'm not a tax professional" or "This might not apply to your situation" or "The ATO might challenge this."

A bigger refund is not always a better outcome.
If the claim cannot be supported, it can become a debt later.

Why bad tax advice is expensive

1. The ATO is watching

The ATO uses data matching and analytics to identify returns that may require closer review. Comparisons may include third-party information, prior returns and patterns across similar taxpayers.

A review isn't the end. It's the start.

2. Penalties stack fast

If the ATO finds an error:

Administrative penalties: 25% to 75% of the unpaid tax
Interest: Interest may apply from the due date. Rates change quarterly.
Court action: In serious cases, criminal prosecution

3. The scrutiny is real

The ATO has flagged three areas for focused attention this Tax Time:

Work-related deductions and expenses
Omitted income
Documentation and substantiation

Real numbers

What an unsupported $15,000 deduction could cost you

Additional tax

$4,500

30% tax rate

Penalty (75%)

$3,375

of tax owing

Interest

$2,000+

accrued over time

Total cost

~$9,875

for one bad claim

That refund you were trying to get suddenly becomes a bill.

What can happen when a claim is disallowed?
You may need to repay the tax shortfall. Interest may apply from the original due date, and an administrative penalty may apply depending on the circumstances and the level of care taken.
Penalties are not automatic at the maximum rate. Each case depends on the facts.

Common Tax Time mistakes

Mistake 1

"I saw this deduction on TikTok, so I claimed it"

This is a common tax time risk. Someone posts about a tax tip that worked for them. You see it. You claim it. The ATO disallows it.

The risk

You had no idea the claim was wrong. But the ATO still charges interest and penalties.

Example

A social media creator says: “I work from home, so I claim part of my rent, electricity and internet.”

That may be valid for their circumstances, but it does not mean the same claim applies to everyone who works from home.

The deductions available depend on whether you are an employee or running a home-based business, the calculation method used, the additional costs incurred and the records kept.

For 2025–26, eligible employees using the fixed-rate method may claim 70 cents for each hour worked from home. This rate covers specified running expenses, and records of hours worked are required.

Mistake 2

"I mentioned it to my accountant, so it must be covered."

Your accountant can only assess a claim using the information and records available to them.

TELL YOUR ACCOUNTANT

what the expense was
how it relates to earning your income
whether it had any private use
whether you were reimbursed
what records you hold

A BRIEF OR INCOMPLETE DESCRIPTION CAN CHANGE THE TAX TREATMENT.

Don't rely on general information without checking the details.

Mistake 3

"Cash work doesn't have to be reported"

This is a common misconception and increasingly risky.

The ATO has access to:

Bank deposit data PayPal and Stripe records Credit card statements Electronic payment records Business registration data (ABN lookups)

Income generally needs to be declared regardless of whether you were paid by cash, bank transfer, an online platform or another payment method.
The ATO receives information from a range of third parties and may compare it with amounts reported in tax returns. Keep records that explain your business, contracting and side-income transactions.

Mistake 4

"I'll claim it now and sort it out if audited"

This is a compliance gamble. If you get audited:

You'll need to defend the claim with documentation
If you can't, the ATO will disallow it, charge you the tax, add interest and penalties
You'll have to pay legal or accounting fees to defend yourself

It's cheaper to get it right the first time.

Mistake 5

"Other people claim this, so it must be okay"

Just because others claim something doesn't make it right. The ATO processes millions of returns. Some claims slip through. Some don't get audited. But that doesn't mean they're valid. Your return should be based on your actual situation, not what you think others are getting away with.

The areas the ATO is really checking

Work-related deductions and expenses

Home office (percentage of home, percentage of running costs)
Car expenses (work-related percentage, fuel records, diary evidence)
Clothing and uniforms (if genuinely specific to work—not just "clothes I wear to work")
Professional development and training
Subscriptions and memberships
Phone and internet (work-related percentage)

What gets challenged: Claims that don't match your industry. High deductions for a salaried worker in a corporate job; low deductions for a tradesperson. Claims without supporting documents.

Omitted income

Side-hustle income (freelancing, selling online, consulting)
Cash jobs and contract work
Rental income from holiday homes or investment properties
Investment income (dividends, interest)
Government payments (disaster relief—it's still income)
Family loans, if actual gifts

What gets challenged: Income that appears in your bank account but not on your tax return. Patterns of spending that exceed your declared income. Keep evidence explaining significant transfers, including genuine loans, gifts, reimbursements and transfers between your own accounts. This helps distinguish them from taxable income if questions arise.

Your safeguards

How to protect yourself

Be skeptical of Tax Time tips

Before relying on a tax tip, check these 5 things:

Who published it? - Are they a registered tax agent, recognised professional body, government source or qualified adviser?
Which income year does it cover? - Tax rates, thresholds, methods and eligibility rules can change.
Does it apply to your circumstances? - Occupation, employment arrangement, private use, reimbursement and business structure can change the answer.
What records are required? - A potentially allowable expense may still be denied if it cannot be supported.
Is it general information or personal advice? - An article, video or AI response cannot assess facts it has not been given.

If the answer to any of these is "no" or unclear, verify the advice before acting.

Use AI for questions—not final tax positions

AI tools can help explain terminology, organise questions and provide general background. They may also use outdated information, miss exceptions or produce an answer that sounds certain when it is not.

The ATO has stated: "Your tax return isn't the place for guesswork."

Do not use an AI response alone to decide:

whether an expense is deductible
how an asset or transaction should be treated
whether income must be declared
what records are sufficient

Check important claims against current ATO guidance and discuss your circumstances with a registered tax agent.

Get professional advice

A qualified tax adviser will:

Ask detailed questions about your specific situation
Identify what you can and can't claim
Help you document and substantiate claims
Flag risky areas
Update you if rules change
Support you if the ATO asks questions

This costs money. But it's far cheaper than paying back taxes, interest and penalties.

Keep detailed records

Whatever you claim, be ready to support it. The ATO may ask for:

Receipts and invoices Bank and credit card statements Diary evidence (car, home office) Letters from your employer

Without adequate records, a deduction may be reduced or denied. The evidence required depends on the expense and the applicable substantiation rules.

Report all income

If money came into your account that's income, report it. This includes:

Side-hustles and freelance work Cash jobs Rental income Investment income Government payments Family loans (if actually gifts)

Omitted income is an area the ATO routinely checks using information reported by banks, employers, government agencies and other third parties.

What Modoras does differently

Tax advice should reflect your income, expenses, records and personal circumstances—not a generic online example.
A Modoras accountant can help you:

Get your tax right the first time

Detailed review of your actual situation
Identification of legitimate deductions you might miss
Clear explanation of what the ATO allows and why
Documentation and substantiation support

Protect you from risk

Flag areas that commonly get audited
Advise on documentation you need
Explain the risks of aggressive claims
Help you stay compliant, not just get a big refund

Give you peace of mind

You know your return is defensible
If the ATO asks questions, we have documentation ready
If the ATO asks about a claim, you may need to explain how it relates to your income and provide the supporting records.

Talk to Modoras

Don't let Tax Time misinformation
cost you.

If you're unsure whether a claim is valid, whether you're reporting all your income, or how the recent tax changes affect your situation, get in touch for a no-obligation conversation. The safest approach: get professional advice for anything you're unsure about. It costs less than penalties.

Get in touch

This article provides general guidance on common tax risks. Tax rules are specific to individual circumstances. Please contact us to discuss your situation before making claims or decisions on your tax return.