Australians hoping to slip questionable deductions or undeclared income past the tax office are facing a tougher environment, with the Australian Taxation Office increasingly using data analysis and artificial intelligence to identify unusual tax returns.

The ATO says its technology can analyse large volumes of information, identify patterns and flag claims that appear inconsistent with those of similar taxpayers.

The result is a tax system where unusual deductions, missing income and mismatched financial information are increasingly likely to attract attention.

ATO assistant commissioner Anita Challen said the agency uses information supplied by banks, cryptocurrency exchanges, government agencies and other organisations to pre-fill tax returns and identify discrepancies.

Machine-learning technology is then used to identify patterns that may require further scrutiny.

“If a claim looks a bit unusual compared to similar taxpayers,” the ATO may prompt the taxpayer to review it before lodging their return, Ms Challen said.

The growing use of technology means taxpayers can no longer assume that a questionable claim will simply go unnoticed.

Geraldine Magarey, group executive for policy and international at Chartered Accountants ANZ, said the chances of questionable claims escaping detection were now much lower.

Among the mistakes attracting attention are unreported income, unusually high work-related deductions and financial information that does not match records held by third parties.

Taxpayers are also required to declare income from a wide range of sources, including casual and self-employed work, online activities, crowdfunding, foreign income, rental properties, investments, partnerships and some government payments.

Cryptocurrency transactions are another area facing increased scrutiny, with tax professionals warning that investors can easily make mistakes when reporting digital-asset income.

The ATO says technology is not replacing human oversight. Instead, automated systems are being used to identify potential risks, with human review remaining part of the compliance process.

Experts are also warning taxpayers against relying blindly on advice found on social media or generated by AI tools.

Ms Magarey said people were increasingly following generic tax advice that may not apply to their individual circumstances.

Other common problems include claiming expenses without sufficient records, incorrectly calculating work-from-home or motor vehicle deductions, and failing to declare income from side businesses or investments.

For taxpayers, the message is increasingly straightforward: accuracy matters.

As the ATO gains access to more financial information and becomes better equipped to identify unusual patterns, the chances of an error, or an intentionally inflated claim, going unnoticed are becoming harder to ignore.