8 of the most common tax return mistakes students make

May 22, 2024

We asked Ashley Debenham from etax.com.au about the major flubs to avoid on your tax return this year. 

When you’re studying and working at the same time, life can get pretty hectic. It’s certainly easy to let personal admin like taxes fall down your list of priorities. 

But keeping these simple watch outs in mind before you do your return will help you stay off the ATO’s naughty list—and you’ll hopefully get a sweet little refund in your pocket for your trouble. 

Here are the biggest things tax agent Ashley says not to ignore when completing your return as a student. 

1. Including dodgy deductions

The most common incorrectly claimed items come from students who are studying in one field but working in another, Ashley says. “Students often mistakenly think they can claim self-education expenses like course fees, laptops, or travel.”

“However, for a self-education expense to be eligible, the course you’re studying must be directly related to your current employment. It can’t be to get you a new job or a promotion,” she explains.

2. Being afraid to catch up on skipped tax returns

It can be easier to stick your head in the sand if you’ve skipped a tax return in the past, for fear of fines or interest charges. But Ashley says it’s best to get caught up, because the ATO will chase you eventually.

A tax agent can help you work through your overdue returns and set up a payment plan with the ATO if it turns out you owe money. On the other hand, you may get back a surprise bonus tax return—it happens more than you think!

3. Buying up on ‘instant tax deductions’ at tax time

“For a deduction to be claimable it has to be directly connected to your work. If, for example, you want to claim office supplies, you must need to purchase your own office supplies to do your job,” Ashley explains.

It’s also important to note items over $300 can’t be claimed in full and must instead be depreciated over the ‘effective life’ of the item, which is usually several years.

4. Not understanding that Centrelink payments may be considered income for tax purposes

You might be surprised to learn that Austudy and Youth Allowance are both taxable, Ashley points out. And if you earn money from a part-time job on top of your Centrelink payment, then this may push you above the tax-free threshold, which means you’ll need to lodge a tax return this year. 

To avoid getting stung come tax time, you can ask Centrelink to deduct tax from your payments throughout the year. 

5. Failing to file a return because you’re under the tax-free threshold or haven’t paid tax

While those earning under the tax-free threshold who haven’t paid tax probably don’t need to file a return, Ashley says you do need to notify the Australian Tax Office regardless with a non-lodgement advice. The good news is, much like catching up on late returns, if you have paid tax, you may net yourself a bonus return cheque!

6. Failing to clarify if you need to pay tax as an international student

If you’re studying in Australia and you’re earning income from working, chances are you’ll need to do a tax return, Ashley says. Depending on how long you’ve been in Australia, you may be regarded as a resident or non-resident for tax purposes, and in each case different tax rates do apply. 

If you’re unsure, Ashley recommends getting in touch with a skilled tax agent for individual advice.

7. Not timing your voluntary HELP repayments to your best advantage

If you plan to pay off some of your HELP debt in advance, Ashley wants to remind you that the ATO applies a yearly interest indexation on your loan amount on the first of June each year.

“If you make a voluntary repayment prior to 1 June—with enough notice that they can process it before 1 June—the indexation that’s added to your loan will not include the amount you just paid off, saving you money,” she says. It can take about 4 days for payments to be processed, so consider that your cut-off. 

Remember that this year everyone who paid the higher-than-usual indexation in 2023 will be entitled to a credit, thanks to new legislation about to be introduced by the government. But you can still make a voluntary repayment if you want to reduce your loan further.

8. Trying to DIY a complex tax return

It’s a tax agent’s job to ensure you get the best possible refund and to ensure you avoid ATO trouble, Ashley says.

“Tax agent fees can be claimed as a deduction on your next tax return. For online services like Etax, fees are generally less than $100 and can be deducted out of your refund, so you’re not out of pocket for anything upfront,” she explains.

You can visit the Etax website to book an appointment. Or you can use the Australian Government's Tax Practitioner Register to find a tax agent near you.