NATION Taxman to focus on false returns

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 the tax office had increased its resources to combat dodgy claims after finding widespread incorrect deductions for things such as mobile phones, uniforms and car expenses.

The ATO’s team of “data doctors” compares workers’ tax deductions with those with similar occupations and incomes, putting a spotlight on potential false claims and leading to a full-blown tax 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.

Dr Raftery said the ATO’s hi-tech data-matching systems were improving monthly.

HLB Mann Judd tax partner Peter Bembrick said new reporting rules meant people who traded in Bitcoin or other cryptocurrencies could now be seen by the ATO when transactions exceeded $10,000.

Bitcoin is generally treated as an asset for tax purposes and attracts capital gains tax.

Mr Bembrick said the trend of government authorities sharing more information

THE FEELING THEY’RE BEING WATCHED MEANS THEY TRY AND STAY WELL UNDER THE RADAR

PROFESSOR ADRIAN RAFTERY

would continue. “People have to assume that the ATO will know a lot,” he said.

Anyone facing a tax audit should be forthcoming and back up their claims with records, Mr Bembrick said. “An audit is not something that anyone’s going to enjoy, particularly if it drags on.”

Most audits are finalised within 90 days. They usually start with a phone call, followed up in writing, and the ATO often speaks with banks and employers.

“We also access third-party data. It might be immigration records, toll records, anything we can use to try and verify these claims,” Mr Kendrick said.