Risk grows of tax audit for dodgy claims

MILLIONS of Australians are at increased risk of an audit this year as the tax office takes a harder line on work-related expenses and other claims.

More than 360,000 audits and reviews will be conducted on individuals, while more than 1.3 million workers and two million real estate investors are being emailed.

Australian Taxation Office assistant commissioner Adam Kendrick said it had increased resources to combat dodgy claims after finding widespread incorrect deductions for things such as mobiles, uniforms and car expenses.

The ATO’s “data doctors” compare workers’ tax deductions with those with similar occupations and incomes, putting a spotlight on potential false claims and leading to a full audit for up to 20,000.

“We are finding that we are amending seven out of every 10 tax returns that we audit,” Mr Kendrick said.

The idea of being audited by the ATO strikes fear into the hearts of most people, even if they have nothing to hide.

Deakin University associate professor Adrian Raftery said it was “a normal reaction to get nervous” and people often lowered their deductions after receiving generic warning letters from the ATO.

“The feeling they’re being watched means they try and stay well under the radar,” he said.

HLB Mann Judd tax partner Peter Bembrick said anyone facing a tax audit should be forthcoming and back up their claims with records.

“An audit is not something that anyone’s going to enjoy, particularly if it drags on.”