Australia’s Tax Office to crack down on expense claim fiddles Australia’s Tax Office to crack down on expense claim fiddles

Australia’s Tax Office to crack down on expense claim fiddles
15 Mar 2018

Australia's Tax Office is preparing advice to the Treasury on areas of systemic fiddling of work-related expenses claims.

According to the Australian Financial Review, the announcement comes after a record AUS$21.2 billion (US $16.45 billion) was claimed in expenses at tax time in 2017, around AUS$3 billion (US$2.33 billion of which was believed to be fraudulent.

Treasurer Scott Morrison ordered a parliamentary inquiry into tax deductibility in 2016, looking at whether a reduction in tax breaks for individuals and companies could be used to fund a lower corporate tax rate.

While the House of Representatives economics committee rejected the idea of disallowing interest deductions for businesses, it recommended the ATO review its compliance activity in the area of work-related expense claims, after identifying AUS$100 million (US$77.6 million) in abuse over the course of a single year.

Former ATO executive Richard Highfield, now an adjunct professor at the University of New South Wales, has estimated that 15% of expenses are over-claimed, amounting to between AUS$750 million (US$582 million) and AUS$1.2 billion (US$930,000).

ATO assistant commissioner Kath Anderson said that since July 2016, the ATO has completed or is working on compliance actions targeting more than 350,000 individuals who claimed work-related expenses. The ATO has already warned it will target “other” work-related expenses this year, which include phone and internet bills and account for nearly 40% of all expenses claims.

 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.

Australia's Tax Office is preparing advice to the Treasury on areas of systemic fiddling of work-related expenses claims.

According to the Australian Financial Review, the announcement comes after a record AUS$21.2 billion (US $16.45 billion) was claimed in expenses at tax time in 2017, around AUS$3 billion (US$2.33 billion of which was believed to be fraudulent.

Treasurer Scott Morrison ordered a parliamentary inquiry into tax deductibility in 2016, looking at whether a reduction in tax breaks for individuals and companies could be used to fund a lower corporate tax rate.

While the House of Representatives economics committee rejected the idea of disallowing interest deductions for businesses, it recommended the ATO review its compliance activity in the area of work-related expense claims, after identifying AUS$100 million (US$77.6 million) in abuse over the course of a single year.

Former ATO executive Richard Highfield, now an adjunct professor at the University of New South Wales, has estimated that 15% of expenses are over-claimed, amounting to between AUS$750 million (US$582 million) and AUS$1.2 billion (US$930,000).

ATO assistant commissioner Kath Anderson said that since July 2016, the ATO has completed or is working on compliance actions targeting more than 350,000 individuals who claimed work-related expenses. The ATO has already warned it will target “other” work-related expenses this year, which include phone and internet bills and account for nearly 40% of all expenses claims.

 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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