Aussies have been warned against trying to squeeze in a few extra tax deductions when they lodge their tax returns in the coming weeks. With hundreds or thousands of dollars available in the form of a tax refund on offer, some might be tempted to fudge a few details to get the most out of the Australian Taxation Office (ATO).

But while it might not seem like a big deal, the penalties can be severe. Criminal lawyer Avinash Singh said the most common reason people are caught for tax evasion is through trying to claim personal expenses as business costs.

“People should be aware that over-claiming deductions or exaggerating expenses will likely result in being audited by the ATO,” he said.

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“In 2025, there is a push by the ATO to pursue over $35 billion in unpaid taxes from small businesses and focus on false and misleading deductions.”

The maximum penalty for obtaining a financial advantage by deception is 10 years behind bars. The smallest offence is a fine, which can vary depending on how much money you have obtained through a fraudulent tax return.

Singh said you will usually be required to repay the shortfall and then face an additional administrative fine of between 25 to 75 per cent of the shortfall.

Do you have a tax story? Email stew.perrie@yahooinc.com

He added that it’s better to be “safe than sorry” and just claim what you can prove.

A poll of nearly 3,900 Yahoo Finance readers found that while 90 per cent of people have never lied on their tax return, one in 10 have pushed the truth.

That figure is consistent with data from Finder, and the consumer group estimated that it equated to around two million people.

Some tried to claim more deductions than they should have, while others didn’t report extra income like from overseas, capital gains, or crypto earnings.

The youngest workers were most prone to cheat on their tax returns, with 17 per cent of Gen Z and 15 per cent of Millennials admitting to being untruthful, compared to Gen X and Baby Boomers (both 5 per cent).

"As living expenses soar, many will be looking for strategies to maximise their tax return this year,” Finder’s personal finance expert and Yahoo Finance contributor Sarah Megginson said.

"[But] even a mistake you didn't mean to make can cause trouble. Don't risk making things worse by trying to 'trick the system'.