The ABC has reported that the ATO believes too many people, particularly small business owners and individual filers, are making excessive tax deductions. They’ve vowed to reduce the “tax gap” – the difference between what the ATO collects in taxes and what they would have collected if everyone paid all their taxes according to tax laws.
Taxation Commissioner Chris Jordan reckons the tax gap is more significant in the smaller markets (individuals and small businesses) than in the larger business bracket, which is where many people feel the biggest deductions are being claimed. Their research seems to indicate that one particular area where many errors or misrepresentations occur appears to be within the rental property market. Another area of interest for the ATO is work-related expenses. One example Mr Jordan provides is that many people illegitimately claim laundry expenses – around 6.3 million.
The ATO and Treasury will also be looking at “cash only” businesses in its “Black Economy Taskforce,” in an attempt to crack down on those businesses operating entirely outside the tax and regulatory systems. This taskforce will provide a final report to Government in October to relay their findings. An interim report was released in March.
So how can you make sure that you’re compliant with all the relevant tax laws? One way is to get an accountant to prepare your taxes, honesty is always the best policy. Similarly, it can pay to talk to an accountant to ensure that you’re actually claiming everything you are legitimately entitled to. If you haven’t already filed, now might be a good time to have a discussion with an accountant or tax agent to make sure your return doesn’t get too much attention from the ATO.