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Your 2025-26 Tax Time Preparation Guide

Tax time has a habit of creeping up quickly and for many Australians, the end of the financial year can feel stressful especially when important documents are difficult to find. The good news is that strong tax time preparation can make the entire process significantly easier while also helping ensure you do not pay more tax than necessary.

Preparing early is not just about maximising your refund. It is also an opportunity to review your broader financial position, assess deductions, identify planning opportunities, and ensure your records are accurate and compliant. With the Australian Taxation Office (ATO) continuing to expand its data matching capabilities across income, investments, cryptocurrency, rental properties, and work-related claims, accuracy has never been more important. The earlier you prepare, the easier tax time becomes – here’s your preparation guide for 2025/26 Tax Time.

Tax Time Preparation – Information You’ll Need

One of the best ways to simplify tax time preparation is to create a clear checklist of the information and records you will need before lodging your return (feel free to use ours provided later in this article). While many rely on pre-filled information through myGov, it don’t assume every detail will automatically appear or be completely accurate. Taking the time to verify your records can help avoid amendments, delays, or unnecessary scrutiny from the ATO.

For most individuals, this process starts with gathering income-related documents like:

• PAYG income statements from employers
• Bank interest summaries
• Dividend statements
• Managed fund tax statements
• Government payment summaries, and
• Private health insurance statements

If you have bought or sold investments during the year, you should also collect share trading records, cryptocurrency transaction histories, and capital gains tax information. Cryptocurrency remains an ongoing ATO focus area, and many investors underestimate the importance of maintaining accurate records across multiple exchanges or wallets.

If you own an investment property, you should prepare and locate:

• Rental income summaries
• Loan interest statements
• Council rates
• Insurance records
• Depreciation schedules, and
• Invoices for repairs or maintenance.

Employees planning to claim work-related expenses should ensure they have receipts, invoices, diaries, and vehicle logbooks where applicable. Other commonly overlooked items include HECS/HELP balances, donations over $2, union fees, and professional memberships.

Creating a simple digital folder throughout the year can make a significant difference. Rather than scrambling for documents at tax time, consistent record keeping allows for a smoother and more accurate lodgement process.

Understand What You Can Claim

Many Australians miss legitimate deductions each year simply because they are unsure what they can claim. At the same time, some people overclaim or include private expenses, which can create problems if the ATO reviews their return. Understanding the basic rules around deductions is essential for improving both compliance and tax outcomes.

By and large, the ATO applies three key rules when assessing work-related expense claims:

1. First, you must have spent the money yourself and not been reimbursed.
2. Second, the expense must directly relate to earning your income.
3. Third, you must have records to prove the claim.

If one of these elements is missing, the deduction may not be allowable.

Common work-related deductions can include:

• Vehicle and travel expenses
• Uniforms and protective clothing
• Self-education costs
• Tools and equipment
• Union fees, and
• Professional memberships.

Employees working remotely may also be entitled to claim home office expenses, which remain one of the most discussed deduction categories in recent years.

Investors and property owners may also have access to a range of deductions. These can include investment loan interest, property management fees, depreciation, accounting fees, and maintenance expenses.

Tax deductions should never be approached with a “claim everything and hope for the best” mentality. Accurate, supportable claims are far more valuable than aggressive claims that may trigger unnecessary ATO attention.

Common Mistakes Australians Make at Tax Time

Even well-intentioned taxpayers can make mistakes during tax season. In many cases, these errors are not deliberate, they simply result from rushing the process, misunderstanding deduction rules, or lodging before all information becomes available. Here are some common traps:

• Claiming private expenses as work-related deductions. This often occurs with vehicle use, mobile phones, internet expenses, or clothing purchases.
• Claiming deductions without sufficient records. While some taxpayers assume small expenses do not require receipts, the ATO still expects appropriate substantiation for most claims.
• Lodging too early. Many Australians rush to submit their return in early July without realising that pre-fill data may still be incomplete. Income statements, dividend information, managed fund tax statements, and private health insurance details are not always finalised immediately after 30 June. Lodging before all data is available can increase the risk of amendments later.
• Incorrect calculations for home office claims. Incorrect calculations, estimated working hours, or insufficient diary records can create compliance issues if reviewed by the ATO.
• Cryptocurrency transactions. These remain heavily scrutinised, and some investors mistakenly believe crypto activity is anonymous or not reportable, however the ATO receives extensive data from exchanges and increasingly uses sophisticated data matching technology to identify discrepancies.
• Property investors confusing repairs with improvements. Repairs are generally deductible immediately, while improvements are typically claimed over time through depreciation or capital works deductions. See our article here for more on that.

Taking a careful, organised approach can significantly reduce the likelihood of errors while helping ensure your return accurately reflects your financial position.

Key Dates and Tax Planning Opportunities

The key date for most Australians is 30 June, which marks the end of the financial year. However, several other deadlines throughout July and October are equally important.

Employers generally have until 14 July to finalise Single Touch Payroll (STP) reporting, meaning your income statement may not be tax ready until after this date. For individuals lodging their own tax returns, 31 October is typically the deadline for self-lodgement. However, taxpayers who engage a registered tax agent may receive access to extended lodgement deadlines, depending on their circumstances and registration timing.

Importantly, tax planning opportunities often need to occur before 30 June in order to be effective. This is where proactive advice can add real value beyond simple tax return preparation. Strategies such as making additional superannuation contributions, utilising carry-forward concessional contribution rules, prepaying deductible expenses, or reviewing investment structures may help improve your tax position before year-end.

Investors may also consider tax loss harvesting strategies, where capital losses are used to offset capital gains. Charitable donations made before 30 June may also provide deductible benefits, while sole traders and business owners may be eligible for temporary asset write-offs depending on current legislation and eligibility criteria.

Tax planning is rarely one-size-fits-all. The right approach depends on your income, assets, investments, business structure, and long-term financial goals. Seeking advice before the end of the financial year can provide greater flexibility and potentially create opportunities that may no longer be available once the new financial year begins.

When to Seek Professional Advice

While straightforward tax returns can often be managed independently, many Australians reach a point where professional advice becomes valuable. As financial situations become more complex, the risk of overlooking deductions, making reporting errors, or missing planning opportunities also increases.

Professional tax advice can be particularly beneficial if you have:

• Multiple income streams
• Investment properties
• Cryptocurrency holdings
• Capital gains events
• Foreign income
• Business activities
• Substantial deductions
• Experienced significant life events such as:
  • Marriage
  • Separation
  • Inheritance
  • Redundancy
  • Retirement

A registered tax professional can help ensure your return is accurate, compliant, and aligned with current legislation. More importantly, they can often identify opportunities to improve your overall financial position rather than simply focusing on your annual refund. Tax advice should ideally form part of a broader financial strategy that considers cash flow, wealth creation, superannuation, investments, and future planning.

Tax Time Preparation Checklist

Before lodging your return, make sure you have completed the following:

1. Gather income statements and payment summaries
2. Collect receipts for deductions and work-related expenses
3. Review bank interest, dividends, and investment income
4. Confirm private health insurance details
5. Finalise home office records and diaries
6. Prepare rental property income and expense records
7. Review cryptocurrency transactions and capital gains events
8. Confirm superannuation contributions
9. Wait for pre-fill data to finalise
10. Speak with a registered tax adviser if your situation is complex

What Now?

Good tax time preparation is about more than simply lodging a return before the deadline. It is an opportunity to review your financial position, ensure compliance, and potentially improve your overall tax outcome. The earlier you begin organising your records and reviewing your circumstances, the smoother and less stressful the process is likely to be.

With increasing ATO data matching and growing complexity around investments, working from home, and cryptocurrency reporting, accuracy and preparation matter more than ever. Taking a proactive approach can help reduce the risk of errors while ensuring you claim the deductions you are genuinely entitled to.

If you would like guidance ahead of the 2025/26 tax season, the Tax team at McKinley Plowman can help you navigate the process with confidence – visit our website or call (08) 9301 2200 to arrange a consultation.

written by:

Elvir Karajcic

Elvir is a senior tax manager with over 13 years experience working with privately owned businesses, high-net-worth individuals, and family groups. He enjoys helping clients improve and grow their businesses, with a articular passion for tax optimisation and asset protection strategies.

Outside of work, you’ll usually find Elvir outdoors whether that's hiking, camping, mountain biking, at the beach with his family.