ATO prepares to investigate every tax return
The Australian Taxation Office is set to scrutinise every tax return lodged and is on the lookout for incorrect claims this tax time.
As part of its ongoing focus on closing tax gaps, the Australian Taxation Office (ATO) is reviewing every tax return with a focus on incorrect claims.
Assistant Commissioner Karen Foat is assuring taxpayers who are doing the right thing, and only claiming what they’re entitled to, that they have nothing to fear from a potential audit. For people who have done the wrong thing, even if that’s over-claiming by a little, her advice is that the best thing they can do is to fess up sooner rather than later.
“Each year the ATO contacts around two million people about their returns. In most cases, audits are not our first action.
“Third party data indicating under reported income, and deductions that appear high compared to people with a similar job and income level, tend to raise concerns,” said Ms Foat.
She advised that if the ATO does decide to look closer through an audit, it will contact the taxpayer or tax agent to make further enquiries. In some circumstances, they may also contact the employer to check that the taxpayer wasn’t reimbursed for any expenses that they claimed.
“The sort of information we may need from you or your agent will vary depending on the circumstances. Often, we are just looking for an explanation and documentation on a deduction.
“For example, if you’ve claimed deductions for clothing but you work in a job where a compulsory uniform is unlikely – we may just want to know a little more about why you’ve claimed that deduction,” said Ms Foat.
Her biggest tip to taxpayers is to ensure they work with the Tax Office from the beginning and provide the information required.
“We understand it can be frustrating to dig up old receipts and information, but it is necessary. A small amount of over-claiming by a large number of people adds up to $8.7 billion dollars less each year for essential services, we can’t turn a blind eye to that.”
Whether the Tax Office applies penalties depends on the taxpayer’s behaviour, said Ms Foat.
“We see behaviours ranging from genuine mistakes through to deliberate over claiming. In the most extreme cases of intentional fraud we may seek to prosecute through the courts.”
The ATO’s warning comes after taxpayers rushed to file their returns early this year following an increase in the low and middle-income tax offset.
Ms Foat said that the best thing a taxpayer can do if they think they’ve made a mistake or an error is to ‘fess up’ as soon as possible.
“If we haven’t been in touch with you yet, you can amend your return yourself on myTax or if you use an agent to ask them to lodge an amendment for you.
“If the ATO has been in contact to review your claims and you know you’ve over-claimed, it is important to be honest and get the matter resolved quickly. Taxpayers are more likely to face penalties if they aren’t honest with us once we come knocking,” Ms Foat said.