7th August 2016
When it comes to tax season stress and anxiety can run high. Every year most Australian taxpayers and their accountants do their best to leave no stone uncovered in order to submit a comprehensive and accurate tax return to the Australian Tax Office. But what about those who don’t quite get everything or try to get a little too much?
At the beginning of this year the Australian Tax Office (ATO) had somewhat of a crisis on its hands.
During the 2014-15 tax cycle it was estimated that false or ‘dodgy’ claims netted Australian taxpayers close to $3.5 billion in fraudulent refunds and deductions, costing the Australian government upwards of $800 million in turn. During the 2014-2015 fiscal year, the ATO performed about 450,000 audits and reviews of individual tax returns which lead to an adjustment of more than $1.1 billion in income tax.
However the blame of these false claims cannot and should not be entirely placed on the taxpayer. In most cases it was their accountant, perhaps looking to get their client a better return to boost return business, who falsely gave deductions where sufficient grounds to do so did not exist.
These claims often attempted to tie-in personal expenditures on vehicles, air travel, and office expenses, for instance. While mistakes and carelessness can and do happen within reason when it comes to filing taxes, experts point to the magnitude of the numbers as proof that the threshold of ‘honest mistakes’ has been passed and we are now in the realm of malfeasance.
The situation became so increasingly ubiquitous and out of control that many experts doubted what the ATO could do to stem the tide of dodgy claims made. The ATO appeared not to have the resources or the reach to bring the instances of ‘dodgy claims’ down.
That is until recently.
ATO assistant commissioner Graham Whyte recently announced that the ATO would take action against any individual or firm making falsified claims. The ATO has introduced new real-time checks of deductions for tax returns completed online which can be cross-checked with the claims of others with similar jobs, incomes, and living conditions to see if a claim is substantially higher. In addition each return will be assiduously examined using hi-tech tools and data analytics. This new technology would then identify and red flag any irregularities so they can be reviewed.
It should be noted that this is not meant to be a witch hunt to accuse, intimidate, or disrupt the honest taxpayers, accountants, or tax professionals in Australia. It is simply root out and discipline those who have taken advantage whilst sending a message that ‘dodgy claims’ will not be tolerated.
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