The ATO will be contacting over 1 million taxpayers either directly or through their tax agent in the coming months as part of its compliance activity, and has revealed the most common trouble spots for taxpayers at tax time.
With tax time 2018 beginning this weekend, the ATO has continued its ongoing education campaign by publishing the five most common mistakes seen from its audits and reviews from previous years.
According to the tax office, the top five mistakes include taxpayers who are leaving out some of their income, those who claim deductions for personal expenses, those who fail to keep receipts or records, those who claim for something they never paid for, and those who claimed personal expenses for rental properties.
ATO assistant commissioner Kath Anderson said the tax office would be taking a more proactive approach this year in a bid to clamp down on agents and taxpayers who “push the boundaries”.
“We are increasing our investment in education and assistance, as well as reviews and audits. This year we are expecting to make contact with more than 1 million taxpayers either directly or through their agents,” Ms Anderson said.
“This tax time we will be paying close attention to claims for private expenses like home to work travel, plain clothes, and private phone calls. We will also be paying attention to people who are claiming standard deductions for expenses they never paid for.
“Around half of the adjustments we make are because the taxpayer had no records, or they were poor quality. Yet it’s so easy to keep your records, using the myDeductions tool in the ATO app. Just take a photo, record a few details and then at the end of the year upload the information to your agent or to myTax.”
Further, Ms Anderson said the ATO would be taking a close look at income, including capital gains on cryptocurrency.
“A temp job, cash jobs, capital gains on cryptocurrency, or money earned from the sharing economy is all income that must be declared. We are constantly improving our data matching tools and even a one-off payment may be enough to raise a red flag,” she said.
The ATO’s latest warning comes off the back of several public notices, including examples of incorrect and “adventurous” deduction claims.
Work-related car expenses and clothing-related deductions have also been put on notice, with the ATO’s focus coming as part of a large-scale education campaign in the build up to tax time 2018.
However, the ATO also noted that not all income needs to be declared for tax purposes.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.