TAX time is just days away, prompting a fresh warning from the Australian Taxation Office that messing it up can be costly.

The ATO today unveils the most common mistakes it is finding on peoples' tax returns, and the "red flags" that signal potentially dodgy deductions.

Assistant commissioner Kath Anderson said the ATO would be spending more on reviews and audits this year and had "access to more data than ever before".

"There are five main areas where taxpayers are most likely to get it wrong. We hope to encourage people to take a bit more time to get it right." she said.

Here's what to watch out for.

1. LEAVING OUT INCOME

Gone are the days of simply receiving a wage. Part-time work, investments and side income through Uber or Airbnb are much more common and the ATO tracks most of it electronically.

"A temp job, cash jobs, capital gains on cryptocurrency, or money earned from the sharing economy is all income that must be declared," Ms Anderson said.

"We are constantly improving our data matching tools and even a one-off payment may be enough to raise a red flag."

ATO assistant commissioner Kath Anderson wants people to try to get tax time right.
ATO assistant commissioner Kath Anderson wants people to try to get tax time right.

2. DEDUCTIONS FOR PERSONAL EXPENSES

Work-related expenses are a target area this year as the ATO clamps down in things such as home to work travel, uniform deductions and phone calls.

Deakin University associate professor Adrian Raftery said many mistakes stemmed from failing to understand the tax rules.

"They might work from home and claim the internet but don't realise that they should only be claiming a portion that is work-related," he said.

"Or they think that the clothes they wear to work each day or travel to work is work-related and inadvertently claim."

3. FORGETTING TO KEEP RECORDS

Receipts can be collected in paper form or using online statements, but they must be kept.

"It must be directly related to your income, and you must be able to prove it," Ms Anderson said.

Deakin University’s Dr Adrian Raftery says many mistakes are accidental. Picture: Simon Fox
Deakin University’s Dr Adrian Raftery says many mistakes are accidental. Picture: Simon Fox

4. DEDUCTIONS FOR THINGS NEVER PAID FOR

Many taxpayers mistakenly think they are able to claim "standard deductions" - such as $300 for overall work expense or $150 for uniform costs, even if they did not incur the expense.

The ATO is watching these expenses closely and it will contact employers to check up on your claims during a review.

"You must have spent the money yourself and not have been reimbursed," Ms Anderson said.

5. PERSONAL EXPENSES FOR RENTAL PROPERTIES

The ATO says taxpayers with holiday homes are claiming deductions for times they are using the property themselves, or claiming interest on loans used to buy personal assets.

Dr Raftery said this also reflected people not understanding the rules.

However, the penalties for getting it wrong can be stiff. Dr Raftery said generally the ATO would impose 25 per cent of the tax shortfall - plus interest currently at 8.96 per cent.

"The penalty could be as high as 90 per cent if you have intentional disregard for the tax laws and go out of your way to deliberately prevent or obstruct the ATO in their investigations."