Tax Audit Hot Spots

1. Work-related expense claims

Unusually high work related expense claims

Travel allowance expense claim

Auditing of work related travel claims

2. Rental Properties 

Holiday homes and weekend retreats

Travel claims on rental properties

Holiday costs on newly built, renovated or repaired properties

3. Lifestyle Assets

Boats, Aircraft’s, Valuable motor vehicles, Fine art and thoroughbred horses are just some of the assets the ATO are looking at.

Receiving data matching information from insurance policies.

4. Black (Cash) Economy

The ATO have received extra funding for extending the taxable payments reporting systems (TPRS) to include Courier drivers and Cleaners. The TPRS is currently used in the building & construction industry. The black economy crackdown is expected to raise the government an additional $362 million.

5. ATO Data Matching 

The ATO are becoming more aggressive in their data matching activities.  The ATO continue to use Benchmarks as just one approach towards reviewing the income and expenses of business tax-payers and can apply these to a wide range of business activities . The benchmarks are based on performance indicators provided by trade associations and industry participants. They compare the industry averages to your income and expenses to see if they fall within the range (benchmark).

Another approach, as mentioned previously, is based on information they obtain from Insurance companies in relation to insurance premiums held by taxpayers on luxury assets such as marine vessels, aircraft’s, enthusiast motor vehicles , fine artworks and thoroughbred horses. This is done to provide the ATO with an idea of a taxpayers ‘accumulated wealth’ and whether these assets that are owned by the taxpayer are consistent with the income declared by the taxpayer. The ATO also continue to obtain data from State Land sales offices, banks, share registries, Dept. of Human Services (Centrelink) and State Transport departments.They are also using data from online selling activities such as eBay to determine whether there may be taxpayers that are not declaring income for items sold through these channels. It may be also used to determine whether a taxpayer is just selling the occasional private possession, or if they are running an online business.

Be aware and contact our office if you receive a data matching review from the ATO. Significant penalties and default assessments may be issued if you do not comply, or if you have failed to declare income.

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