Tax time is about to inspire millions of Australians to dig through their drawers and emails for vital receipts and documents needed to lodge their 2024-2025 returns.

Given cost-of-living pressures are weighing heavily on household finances, many taxpayers will be looking to maximise the refund they are entitled to, or minimise the bill they owe.

But there are restrictions on what you can and cannot claim, and experts have issued a warning about the need to play within the Australian Taxation Office’s (ATO) rules.

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How can I prepare for tax time?

Simply, your tax return is a summary of the income you have earned, how much tax you have already paid, and the expenses you claim each financial year (July 1 to June 30).

It is also used to determine if you have paid enough tax to the ATO, the government’s revenue collection agency.

Australians can prepare for tax season by gathering your tax file number and information on bank account interest, and ensuring you have the correct bank account details where refunds are deposited.

Pull together investment and private health cover records, as well as receipts for work-related expenses and tax-deductible donations you plan to claim.

Money Smart, an initiative by the Australian Government, also provides an income tax calculator for those wanting an idea of what they can expect to either be owed or need to pay.

For those working multiple jobs, it is important to remember you will need to declare all of your income sources.

“The ATO has access to sophisticated data tracking through its data matching programs,” Chartered Accountants ANZ’s tax lead, Susan Franks, told www.20304050.best.

“These programs enable the ATO to match third party data with its own data to ensure that people are complying with their tax obligations as well as detect fraud.

“The ATO currently has 25 data matching programs which include information from investment property loans, motor vehicle registries and insurance companies.

“It can, and does, verify what taxpayers claim against these data sources.”

When can I lodge my return?

Australians can file their tax return from July 1 but experts say you should not get caught up in that date.

That is because you want to make sure your document is complete and accurate before you hit the lodge button, to avoid a follow-up call from the ATO.

CPA Australia tax lead Jenny Wong said it is not uncommon for early lodgers to have to amend their returns later, so holding fire can save you in the long run.

“Cost-of-living pressures could mean some people are eager to lodge their tax return as quickly as possible to access a refund, but it’s important to be patient, gather your evidence and claim everything you are entitled to,” Wong said.

“Firing the starting pistol on your tax return too quickly means you could end up shooting yourself in the foot.”

The ATO says taxpayers lodging online through government-run service myTax should wait until later in July because by then “we will have pre-filled information into your return for you”.

“This includes information from employers, banks, government agencies and health funds,” ATO Assistant Commissioner Rob Thomson told www.20304050.best.

“Then, all you need to do is check that your details are correct, and add anything that’s missing, like extra income from your side hustles, or investments.

“You can use the ATO app to check pre-fill information we receive from third parties and work out if you’re ready to lodge.”

How can I lodge a tax return?

There is more than one way to prepare and lodge your return, including a paper tax return by mail, online through myTax or through a tax agent if you have more complex affairs, or simply prefer this method.

More than 14 million individual tax returns were lodged in 2024.

Of those, 5.9 million were lodged by self-preparers and 8.1 million were filed by tax agents.

The average claim made by taxpayers is about $3000.

Why should I lodge through myTax?

The ATO has spruiked the benefits of this method, saying information from your employers, banks, government agencies, health funds and third parties are pre-filled by late July — meaning you just need to double check those details are correct.

On top of that, it says myTax is conveniently available around the clock, and claims “you’ll get your refund faster, generally within two weeks”.

For those choosing to lodge online, you can start by creating a myGov account and linking it to the ATO.

Many will have already done this in previous years.

I want guidance from a tax agent

The majority of Australians still call on the services of a professional to lodge their return.

Experts say that anyone would benefit from the knowledge of a tax agent, especially those with more complex financial and earning activities — think self-employed taxpayers or Australians with investment properties.

“Paying a professional tax agent to do your tax return is itself a tax-deductible expense,” Wong said.

“Engaging an expert to ensure you make the most accurate and comprehensive claims possible could increase your chances of securing a more substantial refund.”

They can also steer you away from things you cannot claim, including the cost of getting to and from work, and regular clothing worn at work.

New research from global small business platform Xero shows 54 per cent of taxpayers worry about making mistakes on their return, and 51 per cent are confused about deduction rules, especially for car, travel, and working-from-home expenses.