There has been a massive jump in the sophistication of the ATO’s information systems and data sharing capabilities this year, which means that those avoiding tax, fudging expenses and cash operators are no longer able to escape undetected.

Data analysis and information sharing within government departments are now broadly available, with the ATO able to isolate data and target people more accurately.

Many of our clients’ are often surprised at just how much the ATO know about them, and how much information is held. Tax returns are pre-filled with some information from the ATO – dividends and interest payments and ABN income, for example – and taxpayers need to be aware that a lot of data is already being reported to the ATO through different channels.

In recent years, the ATO would target particular occupations for work-related expenses, focusing on teachers one year, nurses the next. Now, their audit case selection has become far more comprehensive and they are looking at average claims. Where a claim is abnormal in relation to the industry average, the ATO will seek clarification and further information as to why the claim is irregular. The number of audits has not increased substantially, but the targeting has become a lot more efficient which leads to a higher likelihood of there being an error or issue.

The bottom line is if you’re doing the right thing, you have nothing to worry about. If businesses or taxpayers are cheating the system and not paying their share, the increased sophistication of the ATO now means that these people will be caught and prosecuted, leading to penalties and interest charged on the unpaid tax.

If you’re ever unsure about whether something is claimable or not, it’s always better to ask the question. Give us a call on 03 6231 3448 to discuss.
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