Just Moved to Australia? Don’t Let These Tax Mistakes Cost You

Migrants preparing to lodge their first Australian tax return are being warned to take extreme care or risk facing serious consequences, including audits, penalties and even legal action. Coco Hou, CPA and Managing Director of Platinum Accounting Australia, said the end of financial year is one of the most dangerous times for newly arrived residents.

“Many people don’t realise how aggressive the Australian Tax Office (ATO) can be when it comes to incorrect or misleading tax returns,” Hou said.

“If you’re new to the system and make an innocent mistake, you could still be flagged, penalised or subjected to a full review.”

Hou has outlined the most dangerous and costly tax traps facing new residents in 2025.

Declaring the wrong tax residency – a costly mistake with serious penalties

Many migrants mistakenly assume that because they are not yet citizens, they are non-residents for tax purposes. In reality, Australia’s tax residency rules are based on your intention to stay, your work arrangements, and your living situation – not just your visa.

“If you declare yourself a non-resident when you are in fact a resident for tax purposes, you could underpay your taxes significantly and the ATO will come knocking,” Hou warned.

The penalties can include back payments, interest on unpaid tax and fines of up to 75 percent of the shortfall.

“The ATO uses sophisticated data-matching technology to detect discrepancies, and tax residency is one of their most heavily scrutinised areas,” Hou said.

Failing to declare overseas income – it won’t stay hidden

If you’re classified as an Australian tax resident, you must declare all income – including money earned in your home country.

“New migrants often think that overseas bank interest, foreign investment income or rental property earnings are beyond the ATO’s reach but they’re wrong,” Hou said.

The ATO now has agreements with more than 100 countries and uses global data sharing to track offshore income.

“If you don’t declare it, they’ll find it. When they do, you could face massive penalties and be treated as deliberately evading tax,” Hou added.

Ignoring assets held overseas – the ATO has eyes everywhere

It’s not just income. Migrants often fail to declare overseas assets – including bank accounts, property or shares.

“Even if those assets aren’t generating income, failing to disclose them can still trigger compliance action,” Hou explained.

Worse still, not reporting capital gains on foreign property sales can lead to investigations years later.

“People are shocked when they receive a letter from the ATO five or six years down the track. But ignorance is not a defence,” Hou said.

Claiming deductions you’re not entitled to – easy to get caught

Many new arrivals are encouraged by friends or social media to claim inflated deductions for work expenses, car use, or even clothing.

“There’s a lot of misinformation online but if you can’t prove the expense was directly related to earning your income, the ATO will reject it,” Hou said.

She warned that dodgy tax agents sometimes make overly aggressive claims on behalf of clients but it’s the individual who pays the price when the ATO comes calling.

Missing the lodgement deadline – the clock is ticking

The deadline to lodge your tax return is October 31 unless you’re using a registered tax agent.

“Every year, thousands of people miss the deadline and start accumulating fines,” Hou said.

For migrants, this can be particularly risky if they have not yet obtained a tax file number (TFN) or are unsure how to access the MyGov portal.

“If you delay, you may lose access to tax benefits, refunds or even trigger default assessments that guess your income and overtax you,” Hou said.

Trusting the wrong advice – social media is not the ATO

One of the biggest dangers is getting advice from the wrong people.

“We see people relying on TikTok influencers, unqualified ‘consultants,’ or well-meaning friends who simply don’t understand the law,” Hou said.

“The rules change frequently and what worked in one country absolutely won’t work here. If you get it wrong, it’s not your friend or influencer who will pay the penalty, it’s you,” Hou said.

Don’t risk your future in Australia – get expert help now

Hou urged all new residents to seek professional, accredited tax advice before submitting their first return.

“The ATO is fair, but it’s unforgiving when it comes to non-compliance. New Australians have so much to gain from getting it right and everything to lose by getting it wrong,” Hou said.

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