More than one million taxpaying Australians face interventions that could potentially lead to full audits, the Australian Tax Office (ATO) has warned.
According to the ATO, Australians, who do not run their own business but earn their wages or salary from an employer, are withholding an estimated AUS$8.7 billion (US$6.4 billion) in tax from the government. The sum amounts to 6.4% of all revenue paid by taxpayers that are ‘not in business’.
Taxpayers are hanging onto the money by claiming tax deductions they are not entitled to, the ATO attests. As a result, it plans to randomly select around a million of the country’s 10 million 'not in business' taxpayers for audit.
"This year, the ATO expects to undertake over one million interactions with taxpayers and tax agents claiming work-related expenses – encompassing everything from help and education through to reminders, reviews and audits," it said. "Appropriate action to close the gap will increase the trust and confidence in the tax system.
The ATO claims that 70% of randomly selected tax returns with deductions contained one or more errors.
Deputy commissioner Alison Lendon told The New Daily: "What we have seen is that most people make small, but avoidable, errors so we will ramp up our assistance to help these people understand their obligations and get things right.”
But a smaller number of people were deliberately doing “the wrong thing”, which a “significant impact on revenue”, she said. “These people can expect closer attention from us, especially this tax time," Lendon added.
The Australian Bureau of Statistics reports that during the 2016-17 financial year, the federal government took in a total of AUS$390 billion (US$288 billion) in tax revenue, with three quarters of it coming from income tax relating to individuals rather than businesses. Per capita, Australians contributed on average AUS$15,985 (US$11,790) each to federal coffers.
Last month, the Turnbull government passed legislation that will give all Australian taxpayers a tax cut – worth just over AUS$500 (US$369) a year for middle-income earners and as much as AUS$7,000 (US$5,163) a year for the nation’s wealthiest taxpayers.
The government also wants to slash company tax rates from 30% to 25%, although this plan has so far been blocked in the Senate. It is expected to revisit the policy after the winter break.
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 one million taxpaying Australians face interventions that could potentially lead to full audits, the Australian Tax Office (ATO) has warned.
According to the ATO, Australians, who do not run their own business but earn their wages or salary from an employer, are withholding an estimated AUS$8.7 billion (US$6.4 billion) in tax from the government. The sum amounts to 6.4% of all revenue paid by taxpayers that are ‘not in business’.
Taxpayers are hanging onto the money by claiming tax deductions they are not entitled to, the ATO attests. As a result, it plans to randomly select around a million of the country’s 10 million 'not in business' taxpayers for audit.
"This year, the ATO expects to undertake over one million interactions with taxpayers and tax agents claiming work-related expenses – encompassing everything from help and education through to reminders, reviews and audits," it said. "Appropriate action to close the gap will increase the trust and confidence in the tax system.
The ATO claims that 70% of randomly selected tax returns with deductions contained one or more errors.
Deputy commissioner Alison Lendon told The New Daily: "What we have seen is that most people make small, but avoidable, errors so we will ramp up our assistance to help these people understand their obligations and get things right.”
But a smaller number of people were deliberately doing “the wrong thing”, which a “significant impact on revenue”, she said. “These people can expect closer attention from us, especially this tax time," Lendon added.
The Australian Bureau of Statistics reports that during the 2016-17 financial year, the federal government took in a total of AUS$390 billion (US$288 billion) in tax revenue, with three quarters of it coming from income tax relating to individuals rather than businesses. Per capita, Australians contributed on average AUS$15,985 (US$11,790) each to federal coffers.
Last month, the Turnbull government passed legislation that will give all Australian taxpayers a tax cut – worth just over AUS$500 (US$369) a year for middle-income earners and as much as AUS$7,000 (US$5,163) a year for the nation’s wealthiest taxpayers.
The government also wants to slash company tax rates from 30% to 25%, although this plan has so far been blocked in the Senate. It is expected to revisit the policy after the winter break.
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
Australia loses AUS$8bn annually in undeclared tax income
Australia's tax system revealed
P&N Bank rolls out Ramco's HCM system across Western Australia
