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Australians have been found to be confused about key tax rules and fear making a mistake on their tax return, Xero has revealed.
Xero urges Aussies to seek guidance this tax time
02 June 2025
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8 minute read
New research from Xero has found that many Australians are increasingly concerned about key tax rules as the end of the financial year fast approaches.
The small business platform conducted the Xero Tax Confidence Index survey of 1,000 Australians and found that 54 per cent were worried about making a mistake on their return, 20 per cent were anxious, and 18 per cent were stressed about completing their return.
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Angad Soin, managing director ANZ and global chief strategy officer at Xero, said tax time was daunting for all taxpayers.
“Our research shows that one in five Australians have avoided asking questions at tax time because they were worried it might seem silly or obvious. Similar research shows 33 per cent of business leaders found tax prep overwhelming. When it comes to tax and getting it right, there’s no such thing as a silly question,” he said.
“At Xero, we wanted to identify universal challenges and knowledge gaps for all Australians as we approach EOFY, with the aim of providing simple and easy-to-use information to reduce confusion and anxiety at this time of year.”
The survey reflected that 73 per cent of Australians were worried or anxious about tax time in general, 33 per cent were worried about owing money to the Tax Office, 28 per cent were worried about following tax rules correctly and 22 per cent were worried about being audited by the ATO.
Xero noted that the tax time pressure was even greater for small business owners, as a separate survey of 1,000 small business owners found 71 per cent said it was stressful and 83 per cent said it was overwhelming, with navigating tax compliance cited as the top source of overwhelm.
Tax deduction rules were found to be a common source of confusion across respondents, as 51 per cent admitted they were confused about the deduction rules, particularly those related to car, transport, travel and working from home expenses.
Almost one in five said they had tried to claim a deduction they weren’t sure was eligible, with half of those having found their deduction didn’t go positively for reasons including not getting the return they expected, they discovered their purchase was ineligible to claim, or they had to amend their return due to incorrect deduction claims.
Xero said that despite this confusion, most Australians relied on trusted sources for tax guidance, such as the ATO, their tax agent or accountant, with only 7 per cent having consulted AI tools like ChatGPT and only five per cent relying on social media influencers.
Soin said if Australians had any questions during tax time, they should speak to their accountant or tax practitioner. Small businesses could find more information and practical tips on Xero’s EOFY Resource Hub.
“Getting the right support in place is key to building confidence around tax time. That’s why we built our EOFY hub to help small business owners.”
“Finding a trusted advisor who can answer any questions and guide you through the process is invaluable, as is using tools to capture your data throughout the year for tracking expenses and allocating them to the right categories.”
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