Xero, the global small business platform, has released new research¹ revealing many Australians are heading into this end of financial year (EOFY) period concerned and confused about key tax rules.
The Xero Tax Confidence Index survey of more than 1,000 Australians found that “more than half (54%) are worried about making a mistake on their return, while around one in five report feeling anxious (20%) or stressed (18%) at the prospect of completing their return.”
Nearly three quarters (73%) of Australians are “worried or anxious about tax time in general, with owing money to the Australian Taxation Office (ATO) (33%), following tax rules correctly (28%), and being audited by the ATO (22%) among the most common concerns.”
The tax time pressure is even greater for Australia’s “2.6 million small business owners.”
Separate Xero research revealed the “majority of the more than 1,000 surveyed small business leaders said they find tax time to be stressful (71%) or overwhelming (83%), with navigating tax compliance cited as the top source of overwhelm for a third of respondents.”
Angad Soin, Managing Director ANZ and Global Chief Strategy Officer at Xero, said:
“Tax time can be daunting for all taxpayers — individuals and small businesses alike. 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% of business leaders find tax prep overwhelming. When it comes to tax and getting it right, there’s no such thing as a silly question.”
As noted in the update:
“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. 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.”
While 58% of Australians said they made “purchases in the previous financial year with the intention of claiming them as personal tax deductions, more than half (51%) also admitted they were confused about deduction rules — particularly those relating to car, transport and travel expenses (21%) or working from home costs (21%).”
Almost one in five said they had previously “tried to claim a deduction they weren’t sure was actually eligible, and half of those who made a specific tax deduction purchase last year found it didn’t go positively, for reasons including they didn’t get the return they expected (17%), discovering their purchase was ineligible to claim (21%), or they had to amend their return due to incorrect deduction claims (7%).”
Despite the confusion, most Australians rely on trusted “sources for tax guidance, including the official ATO website (51%) or a tax agent or accountant (40%).”
By contrast, only seven per cent have consulted AI tools “like ChatGPT, and even fewer (5%) use social media influencers.”
About the research
The ‘Xero Tax Confidence Index’ research was commissioned by Xero and conducted “by Lonergan Research. Lonergan Research surveyed a nationally representative population of 1,003 Australians aged 18+.”
After interviewing, data was weighted “to the latest population estimates sourced from the Australian Bureau of Statistics.”
The survey was conducted online amongst members of “an independent and permission-based panel, between 29 April 2025 and 5 May 2025.”
Small business research was commissioned by Xero and “conducted by YouGov.”
Total sample size was 1,077 Australian adults, “with 80% from NSW, VIC and QLD, who are small business owners and decision makers in businesses with fewer than 20 employees.”
Fieldwork was undertaken “between 10th – 19th May 2024.”
The survey was carried out online.