Retirement Income

Fri, 31 May, 2019Joanita Wibowo

It's tax time: Who the ATO is targeting this year

It's tax time: Who the ATO is targeting this year

With tax time approaching fast, Aussies have been warned that their claims will face tougher scrutiny as part of the Australian Taxation Office’s attempt to crackdown on the $8.7 billion “tax gap”.

Suspicious work-related claims – such as laundry, home office and car expenses – will be examined more closely, along with property rental deductions and earnings from cryptocurrency investments and gig economy platforms such as Uber and Airtasker.

According to the ATO, there is an $8.7 billion shortfall between the tax that people should pay and the tax they are actually paying, with work-related expenses as the biggest contributor in widening the gap.

Last month, the ATO also said it would keep a close eye on dodgy rental deductions this year, including holiday homes that are not genuinely available for rent. 

“A random sample of returns with rental deductions found that nine out of 10 contained an error,” said Assistant Commissioner Gavin Siebert.

“Where we identify claims of concern, ATO staff will investigate and prompt taxpayers to amend unjustifiable claims. If necessary, we will commence audits.

“Over-claiming robs the whole community of essential services and will not be tolerated by the Australian community.”

According to H&R Block director of tax communications Mark Chapman, the ATO has secured more resources from the government to act on tax noncompliance.

“I think we’ll see far more audits and more letters in relation to incorrect claims around work-related expenses and property, and we’ll see far more data-matching around cryptocurrency and the sharing economy,” Chapman told news.com.au.

“'They do a lot of investigation in this space through technology — they data-match, they have benchmarks, if expenses are outside the norm people will get a letter which is not a full audit, it invites them to think again.”

Siebert said the ATO expects to double the number of in-depth audits they conduct this year and may investigate more data from the audited taxpayers, including utilities, tolls, social media and other online activities.

Deliberate attempts to over-claim entitlements or underpay tax may lead to a penalty of 75 per cent of the claim.