The Australian Tax Office (ATO) has confirmed it is conducting random audits of taxpayers in a bid to ferret out spurious work expenses. The random audits began 18 months ago and are ongoing. Here's what you need to know.
A whopping $22 billion was claimed by Australian taxpayers for work-related expenses last year, with $7.9 billion of deductions falling under the hard-to-qualify "other" expenses. This has created a theoretical "tax gap" - AKA missing tax dollars - that could be in the billions.
As reported by the SMH, the ATO has already unearthed "a number of errors" by undertaking random audits. These errors included personal deductions that were in no way connected to the tax payer's job.
This year, the ATO will be paying close attention to ‘other’ work-related expenses to ensure people are not over-claiming. In addition to random audits, the organisation is also using sophisticated systems and analytics to ensure wrongdoing doesn’t fly under the radar.
Past random audits conducted by the ATO have exclusively targeted small businesses and individual taxpayers. High-wealth individuals or companies are exempt.
In an earlier statement, Assistant Commissioner Kath Anderson explained why the ATO was coming after individuals even though the claimed amount is usually inconsequential.
"These might not always be big amounts, but together they add up. Plus, no matter how small, it’s not OK for someone to expect the rest of us to pay for their private expenses," Anderson said.
If you're reading this and are worried, it's probably a good idea to check back on any work expenses you claimed past few years. To pass the tax man's sniff test, they need to meet all of the following criteria:
- You paid for it and were not reimbursed by your employer.
- The purchase was directly related to earning your income and not a private expense.
- You have a record to prove it. (i.e. A physical receipt or electronic proof-of-purchase.)
Still not sure? You can read up on specific expenses you shouldn't have claimed here.
If you engaged in a little "creative licence" while lodging your tax return last year, it's time to start worrying. the Australian Taxation Office (ATO) is still sifting through everyone's work-related expenses for 2017 and it reckons a lot of them smell fishy. A whopping $7.9 billion was claimed by Australian taxpayers for "other work-related expenses" last year.
Consequently, Australians are now officially "on notice" to have their receipts ready for inspection.