The Australian Taxation Office (ATO) has revealed an income tax gap of $8.7 billion for individuals not in business for FY2015, warning that they were planning to crack down on both agent-prepared and self-prepared reporting errors.
The ATO said that this was caused primarily by incorrectly claimed work expenses through carelessness or deliberate wrongdoing, both of which they would be targeting going forward.
“What we have seen is that most people make small, but avoidable, errors so we will ramp up our assistance to help these people understand their obligations and get things right,” ATO deputy commissioner, Alison Lendon, said.
“A smaller number of people are deliberately doing the wrong thing – that has a significant impact on revenue. These people can expect closer attention from us, especially this tax time.”
The ATO planned to increasingly use data and technology to identify outliers, with the Government announcing additional funding in the 2018 Budget to support its efforts.
The Office also warned they were taking steps to address the error rate in agent-prepared returns, which were higher than that of self-prepared returns.
“The ATO works alongside the Tax Practitioners Board to identify and closely monitor these agents. Where we see evidence of unprofessional conduct, we will take action to protect the community and the integrity of the tax system,” Lendon cautioned.
Common errors found by the ATO included claiming deductions where there is no connection to income, claims for private expenses, or no records to show that an expense was incurred. The Office was also concerned about high rates of incorrect claims for rental property expenses and non-reporting of cash wages.