Thou­sands get ATO tax re­fund queries

The tax of­fice is us­ing so­phis­ti­cated tech­nol­ogy to spot tax­payer er­rors, writes

The Gold Coast Bulletin - - BUSINESS - Tim McIntyre

SO­PHIS­TI­CATED new data­match­ing tech­nol­ogy used by the ATO is see­ing more tax­payer er­rors be­ing flagged than ever be­fore, ex­perts warn.

Thou­sands of Aus­tralians have re­ceived let­ters from the ATO this tax pe­riod af­ter its high tech anal­y­sis found in­con­sis­ten­cies in their lodged re­turns. The let­ters iden­tify the po­ten­tial is­sues and out­line any ad­just­ments in­tended by the tax of­fice.

Etax se­nior tax agent Liz Rus­sell said most of the time, the let­ters are the re­sult of in­no­cent mis­takes.

“Tax­pay­ers tend to re­ceive th­ese let­ters off the back of com­mon mis­takes,” Ms Rus­sell said. “For ex­am­ple they for­got to in­clude one PAYG sum­mary af­ter switch­ing jobs dur­ing the year, or they didn’t re­alise that bank in­ter­est, al­lowances and Cen­tre­link pay­ments are clas­si­fied as in­come and must be de­clared on your tax re­turn.

“This year we are see­ing more data match­ing let­ters be­ing is­sued, but that doesn’t mean more peo­ple are do­ing the wrong thing. The ATO’s lat­est tech­nol­ogy helps it cast a wider net and catch more er­rors or un­usual de­duc­tions claims.”

Should a let­ter be re­ceived, it is im­por­tant to be proac­tive, or risk los­ing money.

“The ATO may con­duct an au­dit on a tax­payer’s re­turn any­where from one month to two years af­ter it was lodged and tax­pay­ers typ­i­cally have two to three weeks to re­spond,” Ms Rus­sell said. “Once you re­ceive a let­ter, jump straight on the phone to your tax agent and get ad­vice on what to do next.

“If you bury your head in the sand and do noth­ing, the ATO will make an ad­just­ment based on what it thinks. They can ad­just details and re­move de­duc­tions they’re sus­pi­cious about. This could end up cost­ing you hun­dreds, if not thou­sands of dol­lars.”

Tax­pay­ers with an agent, their ac­coun­tant for ex­am­ple, may ben­e­fit from their abil­ity to com­mu­ni­cate and deal with the ATO on their be­half.

“That could be the dif­fer­ence be­tween whether you get a penalty or a re­fund,” Ms Rus­sell said.

If a tax­payer can pro­duce ev­i­dence, such as a PAYG state­ment sum­mary, pri­vate health state­ment or bank state­ment for ex­am­ple, the ATO may not fol­low through with any ad­just­ments.

If no ev­i­dence is avail­able, the ATO may re­quire ex­cess money to be paid back.

“If the ATO de­ter­mines the tax­payer failed to take rea­son­able care, was reck­less in com­plet­ing their re­turn, or in­ten­tion­ally dis­re­garded tax rules, it may is­sue a penalty,” Ms Rus­sell said.

Such penal­ties could in­clude 25 per cent of the amount owed in the case of fail­ure to take rea­son­able care; 50 per cent for reck­less­ness or 75 per cent for in­ten­tional dis­re­gard; though th­ese penal­ties were com­pletely at the ATO’s dis­cre­tion, Ms Rus­sell said.

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