ATO’s Audit Targets

Recently, the ATO has updated new audit targets to maintain the health of the tax systems, and make sure that all taxpayers pay their fair share.

There are a lot of taxpayers mistakenly claiming their deductions or trying to evade paying tax.

Some of the areas that the ATO have stated it will be focusing on are:

• Work- related expenses:
  • Overnight travel;
    • You can’t claim a deduction for the travel expenses if your employer reimburses your expenses, and you live away from your usual home to perform your work.
  • Motor vehicle expenses for travelling between home and work; and
  • The work-related proportion of use for computers, phones and other electronic devices.
    • The ATO is targeting the percentage value of work-related use compared to personal use, not the actual cost of the devices.
  • Rental property expenses:
    • Excessive deductions being claimed for holiday homes (deductions should be limited to the amount of income earned, or to the number of days actually rented out at a commercial rate);
      • ATO has recently sent out letters to taxpayers in about 500 postcodes across Australia, reminding them to claim their deductions correctly regarding the investing properties.
    • Husbands and wives inappropriately splitting rental income and deductions for jointly owned properties; and
      • This inappropriately splitting is trying to take the advantage for the highest income earner.
    • Interest deductions being claimed for the private proportion of loans.
      • If the property owner refinances and uses part of the money for personal use , they should have only claimed the portion of interest that relates to the rental property.
    • Tax professionals failing their own obligations, such as lodging returns and paying liabilities.
    • Cash economy:
      • The building and construction industry; and
      • The restaurant, café and takeaway industry.
        • ATO had recouped $200 million through 10,000 audits of businesses that were found to be hiding cash transactions.
      • Contractors
        • Employers misusing contracting arrangements with the intention of avoiding employment overheads.

For more detailed information on how this could affect you, please contact us on 07 5444 1022 or email info@gpla.com.au.