ATO’s main tax time focus areas for 2026

Jenny Wong:
Welcome to CPA Australia's With Interest Podcast. I'm Jenny Wong, tax lead at CPA Australia. As we head into tax time 2026, there's plenty for tax agents and their clients to navigate from income reporting and record-keeping to work-related expenses working from home claims and the rising risks on misinformation, AI and scams.

In this first episode of our tax time series, I'm joined by Anita Challen, assistant commissioner at the ATO. We'll unpack the ATO's key focus areas this year, the issues that continue to trip taxpayers up and how agents can help clients get it right from the start.

We'll also touch on what's new in the ATO toolkits and why relying on trusted advice has never been more important. Welcome to With Interest, Anita.

Anita Challen:
Thanks, Jenny. Thanks for having me.

Jenny Wong:
So, let's kick things off. What's shaping the ATO's focus this tax time and what are the big things agents need to have on their radar?

Anita Challen:
Yeah, it's a great question. We're working really closely with agents. We understand and recognise the vital role that tax practitioners play in ensuring that their clients and taxpayers in general get it right the first time.

So, that includes things like ensuring you're reporting all the income that you've earned, claiming only those deductions that you're entitled to claim. And of course, making sure that you've got the appropriate records and substantiation to back up those particular claims.

We're also really mindful that for many tax practitioners, the engagement that you have with your clients isn't just once during tax time, that it happens progressively throughout the year and setting up those good patterns of behaviour and habits during the year can be really helpful when it comes to tax time.

We're also really aware of the support that taxpayers and businesses might be needing in particular this tax time. And of course, we're always taking into consideration the circumstances big and small that might need to shape how we tailor that support for taxpayers. So, that's another really clear focus for us this year.

Jenny Wong:
Picking up on that, are there any changes or updates agents really need to be across heading into this tax time?

Anita Challen:
Yeah. Look, really, as you mentioned at the start, the circulation of incorrect information is something that we're really focusing on. I think no doubt everyone would be aware we might be in for some law change this year.

At the time of recording while these things aren't yet law, we are aware of proposals to remove the lower threshold of the $2 donation deduction that you can claim for deductible gift recipients. We're also aware of the government's proposal to introduce a $1,000 standard deduction for work-related expenses. So, that's something to look out for in future income years.

One of the things that is now law and that may impact taxpayers for the first time this year is that you can no longer claim general interest charge or shortfall interest charge that was incurred since the 1st of July 2025. Of course, that can vary if you're in a substituted accounting period, so pay attention to the variations if that's you.

We also update our toolkits for tax time, including more specific information for rental property owners. We've got some really useful checklists and things that you can share with your clients that makes it really easy, both for making decisions, but also to help in terms of making sure that you've got all the records that you need to maintain and keep during tax time.

And finally, as part of the ATO's modernization of tax administration systems, we're really focusing on the quality of information that's passing through in terms of trust tax returns. And this year we are actually looking to prefill in individual beneficiaries the trust distributions that they've received.

So, it's now even more important that tax professionals focus on ensuring the information in trust tax returns is correct and aligns in terms of the trust resolution information and importantly, lodge as soon as you possibly can because those trust returns are what we are going to use in terms of ensuring we've got the information for prefill.

Jenny Wong:
And what about AI? What's the latest for the ATO?

Anita Challen:
Yes, a very hot topic at the moment. Look, I think like all big organisations, the ATO is looking at the ways that we can use AI and automation to ensure that we're most effective in terms of administering the tax and super systems.

We use it already in terms of understanding and applying data and analytics and it really makes it so that we're better able to tailor our services for people. It also ensures that we can provide and make it easier for clients and taxpayers to do what they need to do in terms of meeting their obligations. Critically - and I think all the community would expect that we use it really precisely and purposefully. There's always a human in the loop.

So, we do make sure that there's definitely humans looking and making sure that we're applying it in the most effective and ethical way and looking for all of those opportunities moving forward to continue how we build that confidence in how we administer tax and super systems.

Jenny Wong:
We see the same pain points come up year after year. Where are taxpayers still struggling the most and what do agents need to watch out for?

Anita Challen:
Yeah, look, tax agents do a fantastic job and broadly tax practitioners in terms of making sure that their clients get it right, but there are some areas of concern that are worth pointing out. One of the areas that's of particular concern and can get quite complicated is when it comes to record keeping and substantiation. So, it's really important that you work with your clients to make sure that they are keeping appropriate records.

Of course, bank statements and things like that are really valuable to evidence the fact that you've paid the money for something, but it probably isn't enough and you need more detailed receipts and records to actually substantiate the claims that you're making.

So, all of that is really important. Some things that you may be claiming need really specific records like log books, depreciation, schedules, and other things. So, again, really important that you maintain good record keeping. Have those conversations with your registered tax professional, so that you know what you need and can start to collect that through the year rather than waiting until tax time to try and muddle your way through and get it all together.

Jenny Wong:
Work-related expenses are always a hot topic. What's really on the ATO's radar this year?

Anita Challen:
Two main things I think that are really in focus. So, car expenses, it's probably worth noting that for most of us who are employees, there's actually not a lot we can claim in terms of car expenses. In most circumstances, we're travelling from home to our regular place of work and they are considered private expenses. So, even if you pay a toll or pay parking, they're not things that you can claim.

If you are in a situation where you're doing a little bit more than just going from home to work and you can actually claim the kilometres that you've travelled, we try and make it a little bit easier when it comes to using the cents per kilometre method, but one thing to remember is that in making it easy, it actually covers all of the relevant expenses related to your use of your car and the kilometres you've travelled.

What that means and what we sometimes see is that you can't actually then claim additional expenses elsewhere in your tax return. So, things like depreciation of your vehicle are all included in your cents per kilometre method.

The other thing we sometimes see is that people claim the full extent of the maximum number of kilometres that are available via that method without actually having travelled that number of kilometres. So, they're either doing limited travel or none at all that's actually deductible, so something to bear in mind. Keeping records of from where you're going and where to and why is really helpful in a logbook to make sure that you've got all of that available to you.

The other big area that we see people get confused on is in self-education expenses. So, importantly, there does need to be a really strong link between the self-education that you're undertaking and the job that you've currently got.

You can't claim it if it's to get a new job if you're unemployed and if there's just a general relationship between the job that you're doing and the course that you're undertaking. For example, if you're in retail and you wanted to do a full-time fashion design course, while that might be a great career opportunity later on, it's not something that you can actually claim against your current income earning opportunity that you have now.

Jenny Wong:
Working from home is still very much part of people's lives. What do agents need to be telling their clients to make sure they're getting those deductions right?

Anita Challen:
Yeah, look, I think we're absolutely seeing more and more people who are choosing to work from home and that does mean we're seeing a rise in the work-related expenses that people are claiming. At the time of this recording, the fixed rate method, still very popular, was still the same at 70 cents per hour of the time that you're working from home. You still need to provide records.

So, it's important even if you're claiming that fixed rate record that you have records keeping a track of the hours that you are working from home as well as making sure that you've got a copy of each of the bills that you're including in your claim.

The other area where it can get a little bit tricky is to make sure that if you've got any depreciating assets such as a computer or furniture, you do also need to make sure you've got appropriate receipts to support claims that you may make for that. It's really helpful to encourage your clients to keep records as you go. It certainly makes it a lot easier during tax time. We also know that some people as they work from home might be using things for private purposes as well as work purposes.

And so, making sure that you've got just a little bit of a diary perhaps to keep a record of those instances where you are using them for work purposes, both make sure that it's easier to record and substantiate your claims, but also it makes sure that you are maximising all the opportunities you have to get the deductions that you are entitled to.

Jenny Wong:
Let's talk income reporting. It's an area that can really trip people up. What are the common mistakes you are seeing?

Anita Challen:
Yeah. So, one of the big things is it's sometimes easy to forget how broad income actually is. And when it comes to lodging your tax return, you need to make sure that you're declaring all of the income you're earning. So, that includes any wages that you're earning if you're employed. It also includes any side hustles that you might be doing online work, interest, rental income, foreign income.

Foreign income is one that people can sometimes get tripped up on and it is important that you check your residency status to make sure that you know exactly all of the foreign income that you need to declare, which might include interest that you're earning overseas.

Importantly, of course, if you pay tax overseas, you might also be able to claim a credit for that that you've already paid, which is also useful to know. The other really important message, and we say this every year. I know people get really excited in lodging their tax returns early, particularly if you're expecting a refund.

If you wait until the end of July when prefill is available, it can just make lodging your tax return so much easier and working with your clients as a tax practitioner to really reinforce the benefits of waiting. We see so many errors occur because people lodge early. It means extra work for you as a tax practitioner if you've got to amend a tax return later on.

Of course, you can wait for the ATO to do it, but I'm sure no one wants that and waiting just a couple of weeks can ensure that you only have to do it once.

Jenny Wong:
So, Anita, what about income from cash jobs?

Anita Challen:
Yes. Thanks for reminding me. It would be remiss of me not to mention that any cash you receive is also really important to include in your income reporting.

Jenny Wong:
Good record keeping is the backbone of a smooth tax time, but where do clients tend to fall short?

Anita Challen:
Record keeping isn't everyone's favourite thing I'm sure, but it is so important and making sure, as I mentioned before, that you set up really good habits throughout the year is really important. We know that sometimes people rely on things like bank statements and they just aren't usually enough in terms of evidencing for the extent of receipts and things like that that you might need in your tax return.

So, it's really important to make sure that you've got that more detailed information. Also, different things again require different levels of evidence, so bear that in mind as you are making decisions and keeping those records.

Probably what I'd say is find the thing that works for you and make it work for you throughout the year so it's not just a much bigger job at the end of tax time.

Jenny Wong:
Misinformation online is a real problem and we know acting on bad advice can have serious consequences. How do you recommend people cut through the noise?

Anita Challen:
17.45 Misinformation is definitely a huge problem and we know that more and more tax payers are getting their information from really diverse sources, especially online. One of the things that we absolutely encourage tax practitioners to talk to their clients about and for taxpayers to be aware of is to make sure that you check the source of all of the information that you're getting. Also ensure the currency of the information.

There are updates that happen every tax time, so make sure you're using the most up-to-date information that you can. Of course, if it sounds too good to be true, it probably is.

And it's really important that you pause, check, and just make sure that the information that you've got is the right information to be acting on. We're also encouraging taxpayers to ensure that their tax agent is registered with the tax practitioner board to ensure that they are providing the advice that you need.

Jenny Wong:
Scams are becoming more and more sophisticated. Anita, what are the warning signs that agents and their clients should be looking out for?

Anita Challen:
Yeah, we are seeing a significant rise in impersonation scams and it's certainly the case that scammers are getting more and more sophisticated. There are some red flags to look out for, noting that scammers often try and mimic or align with the tone and the sorts of information that would ordinarily appear in ATO messages. Things to look out for include odd language.

Suspicious sender email addresses can also be a bit of a thing to look out for as well as any links or QR codes. It's important to note that the ATO doesn't send unsolicited messages to taxpayers asking them to log on using a link and we also don't directly contact taxpayers via social media.

One of the big game changers that is now available, and it's a really powerful security tool via the ATO app is the opportunity for taxpayers to control the information that they're receiving in their accounts and make sure that they can actually verify when the ATO is contacting them that it is in fact the real ATO. It's really, really simple and it's a really good reason for all taxpayers to download the ATO app and register it on their device.

If you get a call from the ATO and you want to verify that it is the real ATO, you can log onto the ATO app, click on verify call and within 30 seconds you'll get a notification that will confirm that it is the ATO you're speaking to. If the notification doesn't appear, you should assume it is a scam and you can hang up, which is a real game changer, as I said, in terms of being able to make sure that you are speaking to the real ATO.

There's some other tips and tricks like making sure that you actually enter in the address into your browser when you're logging into myGov, checking to see if the message you've got is included in the message history or in your myGov inbox.

If it's not there, it's probably not the ATO. And also you can go to our website and verify or report a scam. You can also type in how to stay scam safe and you can also call us on 1-800-008-540 just to check to see if it is indeed the ATO or it is a scam.

Jenny Wong:
To wrap up, what's your key message for agents and their clients heading into tax time 2026?

Anita Challen:
Look, I think the main things for us is, again, just recognising the critical role that agents play in terms of helping taxpayers to get it right, encouraging your clients to pause and check the information so they only have to do it once.

As always, we are also here to provide any necessary support that people may need and importantly, we will take into account the circumstances and tailor that support for whatever is happening with that taxpayer and/or business. And of course, as we mentioned, remind your clients to make sure that they're using trusted sources like ato.gov.au, the ATO app, and you as a tax professional.

Jenny Wong:
Well, that brings us to the end of this episode of With Interest. A big thank you to Anita Challen from the ATO for sharing her insights on what to expect this tax time and how agents can support clients through a smooth and compliant lodgement.

Anita Challen:
Thank you so much for having me, Jenny.

Jenny Wong:
You'll find links and resources from CPA Australia and the ATO in the show notes. If you enjoyed this episode, please share it with your colleagues and subscribe so you don't miss the rest of our tax time 2026 series. Until next time, thanks for listening.