The Australian Taxation Office (ATO) has advised that it will be increasing its review activity on individual tax returns lodged during the 2026 tax season.
As part of this, many individual taxpayers will receive a letter directly from the ATO before tax time. The purpose of the letter is to remind taxpayers of their obligations and advise that some tax returns may be selected for review before being processed.
While receiving a letter does not mean you have done anything wrong, it does indicate that the ATO will be paying closer attention to work-related expense claims this year.
What is changing?
The ATO has advised that it will be closely reviewing tax returns where work-related expense claims are significantly higher than expected for a taxpayer’s occupation and circumstances.
The ATO’s focus remains on ensuring that:
- Deductions directly relate to earning income
- Claims are supported by appropriate records
- Tax returns are prepared accurately
- Taxpayers can substantiate their claims if reviewed
This means taxpayers with higher deduction claims may be more likely to have their returns selected for verification.
What happens if your return is selected?
If your return is selected for review:
- The ATO may stop the processing of your tax return.
- The ATO will request supporting documentation to substantiate the claims being reviewed.
- The requested information must generally be provided within 28 days.
- If sufficient evidence cannot be provided within that timeframe, the ATO may adjust the relevant deductions before issuing your assessment.
The ATO has indicated that extensions will generally not be granted, as the required documentation should already be available when the tax return is lodged.
How can you prepare?
The best way to avoid delays is to ensure you have records to support any deductions you intend to claim before your tax return is lodged.
Depending on the deductions you claim, this may include:
- Receipts and invoices
- Logbooks
- Travel records
- Working from home records
- Employer documentation
Remember, to claim a work-related deduction:
- You must have incurred the expense yourself.
- The expense must directly relate to earning your income.
- You must have records to support the claim.
How we can help
Our team will continue to work closely with clients to ensure tax returns are prepared accurately and supported by appropriate documentation.
To help make the process as smooth as possible, we encourage all clients to gather their supporting records before their appointment and discuss any deductions they are unsure about with their adviser.
With increased ATO scrutiny expected this year, being prepared before lodging your return is more important than ever.
If you have any questions about your deductions, record-keeping requirements, or the documentation needed to support your claims, please contact the Highview team.
Together, we can ensure your tax return is accurate, compliant, and ready should the ATO request further information.
