The tax refund season is in full swing, with millions of Aussies eagerly filling out their returns for the past financial year, in anticipation of a refund.
Australian Taxation Office (ATO) figures show that more than 4 million individuals filed their 2024-25 tax returns between 30 June and 31 July.
"So far this tax time we've received 3.6 million individual lodgments. Overall, this is a 3% decrease compared to last year. Lodgment numbers for self-preparers have decreased 2%, whilst agent lodged returns are down 6%," the ATO said in its latest tax time update.
Tax deductions are out-of-pocket expenses that lower the portion of your taxable income. Essentially, they reduce the amount of tax you owe, which means the more you claim, the lower your taxable income and, therefore, the higher your refund could be.
There are strict rules, though. You can't just add anything on your tax return with the aim of boosting your refund. Whether it's work-related, gifts and donations, or even the cost of managing your affairs, the ATO has strict guidelines about the deductions you can claim.
And there's a flip side, too. Tax specialists have told The Australian that some deductions are forgotten entirely, particularly by those who prepare it themselves.
Here are 8 of the most forgotten deductions that could boost your tax refund:
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Investment expenses
While it's widely known that interest paid on an investment property is tax deductible, many don't realise that the interest paid on borrowed funds to buy shares also falls under the same rules.
The catch is that the shares must pay dividends. Or in other words, they must be "income-producing".
For example, if an investor borrows money to buy shares in dividend-paying companies such as BHP Group Ltd (ASX: BHP) or Commonwealth Bank of Australia (ASX: CBA), then they can deduct the interest expense from the dividend income.
This doesn't apply to any shares purchased that don't pay dividends.
Adrian Raferty, chartered accountant and Mr Taxman founder, told The Australian that the interest paid on margin loans for shares and investment property mortgages is a tax expense his clients frequently forget about.
He also flags land tax, landlord insurance, and depreciation as commonly forgotten claims.
Financial advice
Fees for financial advice are also tax-deductible, although there are still limits. The measure was introduced this financial year, so workers currently filling out their tax forms might not be aware. Investors can claim these fees so long as it relates to an existing investment or to changing needs.
Superannuation
Aussies who make a personal (after-tax) contribution to their super fund might be able to claim a tax deduction for those contributions. This doesn't apply to employer contributions or salary sacrifice.
Income protection insurance
You can claim a deduction if you pay for income protection insurance yourself (outside of superannuation). The policy is designed to replace your income if you cannot work due to illness or injury. This is not claimable if the insurance is paid through superannuation.
Home office items
Some home office items are tax-deductible depending on what the items are, how much they cost, and whether you're self-employed or working from home for an employer. This can be anything from a new desk to anti-virus software or stationery.
Working from home
People who work from home can claim a tax deduction based on the hours they have worked from home. Workers can use a fixed-rate or actual-cost method to work out their claim for things like electricity and gas, home internet and mobile phone expenses, and, in some cases, even occupancy expenses.
Uniforms
Do you have work-related clothing, such as occupation-specific uniforms, safety gear, or compulsory uniforms with logos? The cost of the items, plus the cost of cleaning them, is tax-deductible. Many know about this claim but misunderstand the rules around it.
Handbags
Another often-missed tax deduction, according to Mark Chapman, H&R Block director of tax and communications, is handbags.
"Many people don't realise you can claim a handbag on your tax return if its used for work to carry a laptop or papers," he said.
