Reports say claims on the education tax fund and property investments are the areas in which taxpayers make their biggest mistakes.

As always, the Australian Tax Office takes a Big Brother approach and watches everything the 11.8 million taxpayers do - and they're saying this year's tax returns will be looked at more closely than ever before, with audit surveillance being beefed up to curb the problem.

The education tax refund (ETR) which was introduced on July 1 has been flagged as the area expected to have the biggest errors and cause the most confusion. Implemented to help families meet the rising cost of education expenses in primary and secondary schooling, ETR is already causing confusion for parents. Eligibility to claim the rebate depends on the type of Family Tax Benefit the family receives. There is also debate and confusion over what items can be claimed for the rebate - with computers, text books, internet and software claimable, but not school fees, uniforms, library fees, tutoring or transport.

Other problem areas identified with false tax returns include car and uniform expenses, rental properties, overseas investment income and interest received on investments.

So when did it all get so confusing? In today's technologically savvy environment, it's easier than ever before to have off-shore investments, online deposits, more complex involvement in property and shares and to not fully understand the tax implications until it's too late.

It is also easier than ever before for the tax office to obtain information about your earnings. For example, the ATO gets data from the Victorian Office of State Revenue and the Land Title Office about the sales of property. If you've sold a property in the previous financial year, and not disclosed the profit in your tax return, there's a good chance the tax man will catch up with you to discuss capital gains.

Detailed information can be obtained directly from the ATO website, or by speaking with a qualified accountant.

And whether it's an honest mistake that's been omitted from your book work, or a sneaky attempt to hide some earnings, or claim expenses which weren't incurred - be reminded that the tax man is watching everyone of us.

*Sara Morrison is client services manager at South West Credit.