The Tax Office Is Checking Deductions For Every Single Occupation This Year

In years past, the Australian Taxation Office (ATO) has singled out particular occupations for closer scrutiny come tax time: in 2011 it included carpenters and flight attendants, in 2013 it was sales and marketing managers. But no such luck this time around: the ATO says it is looking at everyone to make sure deductions are appropriate.

Teacher picture from Shutterstock

An announcement from the ATO highlights the broadened approach. "Every return is scrutinised and it is becoming a lot easier to identify claims that are significantly higher than those claimed by people with similar occupations and employment income," assistant commissioner Adam Kendrick said.

Key areas the ATO will be looking at include:

  • Expense claims that are much higher than other people in the same occupation;
  • Claims for expenses which have already been reimbursed by employers;
  • Private expenses (such as travel to and from work);
  • Excessive deductions for rental properties and holiday homes.

The simple rule? For an expense to be valid, you have to spend the money yourself, it must be related to your work, and you must have a record of it.

Reminder: For specific tax advice relating to your individual situation, consult a registered professional.


Comments

    Do people often fudge their taxes? Doesn't seem like it would be worth it.

      Only the standard "donations less than $150 without receipts". I thought everyone did that.

      Freakenomics did a good write up on fudging taxes (pushing morals to the sidelines for a moment) and found that the risk of being caught is miniscule assuming you're not stupid.

      Also, the number of staff at the ATO is being cut every year. So they have less and less resources. Knowing this, I bet they are trying to counter this with releases indicating that they are going to get more people than ever before. Investigations take work. Work that an undermanned ATO would find difficult.

      If you were the ATO, would you focus your limited resources on trying to recoup $1,000 from an average Aussie or $50k - $100k on a bigger fish?

      With all that in mind our Governments need to run essential services so our tax dollars are necessary for a functioning society (if only we could rid negative gearing). Paying tax is good for society.

        I'm with you on this one. The ATO has taken a big hit in staff numbers, and this sounds very much like a "business as usual!" announcement, or worse, they've been told to do more with less to prove efficiency.

          They still have about 21000 employees. Though that is a 10% reduction from the year before, so that reduction in people power has to come out of somewhere.

          I'm sure they have some serious analytics going on. There is probably a company that sells this sort of stuff to government under exactly that "Use this program to find the cheats, you won't need as many staff".

        Except that they have automated systems using analytics that scan for anomalies using metrics and client behaviour history and algorithms programmed into their systems that analyse every return for inconsistencies. There arent physical people reviewing every single return.

        One piece of advice for people - just because you weren't caught this year, or next or last, doesn't mean you wont get caught. And when you are caught, your previous returns are scrutinised more thoroughly.

        Now, if only those rich billionaires played by the same rules the rest of us do

      As an accountant the things my clients come in with can be horrifying. Talking $15k deductions on $30k income ridiculous. One thing we have been seeing though, even though the ATO are cutting staff they have drastically increased their IT benchmarking and data matching capabilities and once they pick a target they go for the throat.

    There's always a fine line with deductions. And the taxpayer's opinion can easily differ from ATO's.

    Much of the time it's non-deliberate "fudging" ... for example, if you run a business with your home as the registered address, can you claim internet access as a deductible. If so, all or some.

    There are rules set out by ATO as to what's acceptable and what's not. But they can't cover every eventuality and so sooner or later people will have to use their own judgement.

    Fortunately ATO do allow a certain amount of leniency. If your assessment and theirs differ and you can reasonably argue it was a "good faith" mistake, then you may get away with only having to pay the owed tax back rather than a big fine.

    In the long run, it's often easiest just to employ a tax accountant ... whose fee will then be deductible on next year's return!

    With all the Lifehacker articles on 'Big Data' and analytics, surely you guys can see that job losses don't mean they have less ability to detect and find anomalies with people's tax returns.
    IT is enabling them and the ATO has had considerable investment over the last few years.

    My doctor once said "When it comes to medical tests and taxes - you sure as hell want to be right in the middle of the bell curve average!"

    Basically you want to be smack bang in the middle - fly under the radar :)

    If they were really going to do this, then there'd be no need for the announcement. Therefore, this is a psychological tool because they don't have the capacity for a real world, practical check.

    Exactly this. it's just computer analytics. if figures on your return are higher than others in similar circumstances, they ask you to prove it and if you can't prove it and it was deemed that you were deliberately being misleading, penalties can apply.

    This could be up to 2 years after you've lodged your return, in which case you also need to pay interest on that difference.

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