Australia loses AUS$8 billion annually in undeclared tax income Australia loses AUS$8 billion annually in undeclared tax income

Australia loses AUS$8 billion annually in undeclared tax income
20 Jul 2018

More than AUS$8 billion (US$5.9 billion) is lost in tax every year in Australia due to taxpayers’ failure to declare income, with only AUS$500 million (US$369 million) of that sum successfully recouped each year.

But the transition to a fully digitised system is only expected to boost the tax take by an extra AUS$250 million (US$185 million) a year over the next four years, the Tax Office estimates. Nonetheless, Australia is considered relatively successful at collecting income tax revenue, netting 93% of the total it estimates should be received from taxpayers, according to the Sydney Morning Herald.

The Australian Tax Office (ATO) wants to increase this percentage though by targeting work expenses, cash payments in the black economy and property claims.

The ATO's second commissioner Neil Olesen said: "This is a significant ramping up of our activity. For those people who are making genuine mistakes, that [could involve] delivering them a nudge. But equally we are ramping up for those people who are playing more aggressively to make sure they get the message."

The Tax Office is particularly focusing on unscrupulous tax agents who could face disqualification or prosecution in the most serious cases of tax avoidance. Agent-prepared returns were subject to a 78% error rate compared to 57% with self-prepared returns.

There is also set to be a crack-down on jet-setting executives who wrongly claim they are not resident for tax purposes, according to the Canberra Times. The tax advisory board has recommended that decisions here be made on the basis of a simple 'days count' test, where someone is required to be present in Australia for 183 days or more over a 12-month period. 

For outbound individuals, the board recommended that they be considered non-resident if they work overseas and spend less than 31 days working, or 61 days total in the country. Former residents would become non-resident if they spend less than 16 days per year in Australia, and someone who has never been a resident would remain non-resident if they spent less than 46 days there.

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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More than AUS$8 billion (US$5.9 billion) is lost in tax every year in Australia due to taxpayers’ failure to declare income, with only AUS$500 million (US$369 million) of that sum successfully recouped each year.

But the transition to a fully digitised system is only expected to boost the tax take by an extra AUS$250 million (US$185 million) a year over the next four years, the Tax Office estimates. Nonetheless, Australia is considered relatively successful at collecting income tax revenue, netting 93% of the total it estimates should be received from taxpayers, according to the Sydney Morning Herald.

The Australian Tax Office (ATO) wants to increase this percentage though by targeting work expenses, cash payments in the black economy and property claims.

The ATO's second commissioner Neil Olesen said: "This is a significant ramping up of our activity. For those people who are making genuine mistakes, that [could involve] delivering them a nudge. But equally we are ramping up for those people who are playing more aggressively to make sure they get the message."

The Tax Office is particularly focusing on unscrupulous tax agents who could face disqualification or prosecution in the most serious cases of tax avoidance. Agent-prepared returns were subject to a 78% error rate compared to 57% with self-prepared returns.

There is also set to be a crack-down on jet-setting executives who wrongly claim they are not resident for tax purposes, according to the Canberra Times. The tax advisory board has recommended that decisions here be made on the basis of a simple 'days count' test, where someone is required to be present in Australia for 183 days or more over a 12-month period. 

For outbound individuals, the board recommended that they be considered non-resident if they work overseas and spend less than 31 days working, or 61 days total in the country. Former residents would become non-resident if they spend less than 16 days per year in Australia, and someone who has never been a resident would remain non-resident if they spent less than 46 days there.

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

MORE ARTICLES THAT MAY INTEREST YOU

Tax Justice Network Australia reveals country's worst tax dodger

Australia's tax system revealed

P&N Bank rolls out Ramco's HCM system across Western Australia

 

 

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