Maximizing Your 2023 Tax Return: Strategies for Optimizing Your Lodgement

With tax time fast approaching, you may be planning to spend this year’s refund on a holiday, shopping spree or simply to catch up on bills.

But as Australians dream big about their potential cash boost, the tax office has warned you could be greeted with a big shock following the end of the low and middle income tax offset and reduction in pandemic deductions.

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The end of the rebate — which delivered up to $1500 of extra refunds to about 10 million people — will mean millions of Australians will receive a much smaller return, and some none at all.

And with households feeling the squeeze under cost-of-living pressures, it is crucial to make each dollar count.

So, how can you get the most out of your return this year?

H&R Block tax communications director Mark Chapman’s advice is to claim the deductions you are entitled to.

“You can claim a deduction for any expense which you incurred in earning your income,” he told 7NEWS.com.au.

“If you actually incurred a work relationship expense and, crucially, you have the paperwork to prove it and then obviously don’t hesitate to claim it.”

But don’t get too claim-happy, you need to be able to back it up.

“It is important that you’ve got the paperwork, the invoice, the receipt, etc, because the ATO has identified that lots of people are making claims of work-related deductions and they simply don’t have any paperwork to back it up,” Chapman said.

This is where people get caught out, he explained.

The ATO revealed work-related expenses, rental property deductions and capital gains tax were in its sights this year as it homes in on areas where taxpayers often make mistakes.

It estimates there is a net gap of $9 billion between the amount of tax people should be paying, and what they are actually paying.

This shortfall could be attributed to taxpayers making incorrect deductions for work-related or rental property expenses, it says.

Assistant commissioner Tim Loh said taxpayers need to be aware of the changes to working from home deductions and warned against simply copying last year’s claim.

Work-related expenses being in the spotlight this year makes them “high risk”, Chapman said, but that does not mean you should shy away from deductions.

“If you make sure the expense does actually relate to your work, you have actually paid for the expense and you haven’t been reimbursed by your employer and you can prove that you actually spent the money … then, in that situation, absolutely, go ahead and claim it,” Chapman said.

If you are concerned about what you can and cannot claim for work, speak to an accountant.

“We’ll be able to tell you what we can and can’t claim, and that will also minimise the chances of an audit later on,” Chapman said.