While the idea of an audit by the Australian Tax Office (ATO) may seem nerve-wracking, taxpayers have nothing to fear if they are doing the right thing and complying with all their tax obligations.
However, in 2009 the ATO received additional funding to undertake more audits and has indicated that it will be targeting specific groups.
Those who fall within the target categories may find it useful to double-check their records to make sure everything is in order, as it is now more likely that they will be contacted by the ATO. Also talking to your Perth Tax Accountant might be a good idea!
Executives and directors
The ATO will focus its data-matching activities on the correct reporting of shares and options received by directors and executives of both public and private companies. This focus will also include Australian resident directors and executives of foreign companies.
For several years the ATO has been looking at tax minimisation strategies adopted by individuals with a net wealth of $30 million or more. With the increased funding, the ATO will extend this to include those with a net wealth of more than $5 million. These activities will look at:
• Dividends disguised as loans
• Use of group assets for private purposes
• Undeclared and understated capital gains
• Concealed income and assets in tax havens.
The ATO will continue to review income tax returns where work-related expenses are claimed, comparing the deductions claimed to industry norms for certain occupations. This year the focus will be on:
• Truck drivers
• Sales and marketing managers
• Sales representatives
These occupations have been singled out as having a pattern of large or increasing deductions claimed, and a large number of errors revealed by previous review activities.
Each year the ability of the ATO to compare data from financial institutions and other organizations with individual income tax returns increases.
This year, they will be accessing information from share registries, state revenue offices, land titles offices and motor vehicle registration departments to determine who has purchased and sold assets during the year and are therefore possibly subject to capital gains tax. This is in addition to the usual matching of interest, dividends and other income amounts.
In addition, the ATO is concerned that those who have sold shares or other investments at a capital loss may recharacterise it as an income loss and claim a tax deduction against other assessable income. It will also be monitoring this activity.
Employers must still meet their obligations to remit the PAYG amounts withheld from employee wages to the ATO, and to make superannuation guarantee contributions on behalf of their employees. The ATO will use additional funding to identify employers who are not meeting these obligations, and seek payment.
To protect our clients from what can be a very expensive process, should one of our clients be subjected to a random government audit, Baggetta & Co can now offer its’ clients a ‘Audit Protection Service’. For more information on this service, call me on 9317 7300.
February 2, 2017
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