The Tax Office has started undertaking random audits of taxpayers to get a better idea of how much money may be owed by people over-claiming on work expenses.
On Wednesday Tax Commissioner Chris Jordan confirmed that Australian Taxation Office staff had been asked by senior management to undertake random audits in relation to perceived over-claiming of work-related deductions.
If you are an employee you may be able to claim a deduction for some costs related to your job. There are rules that you need to check and records you need to keep.
More than $22 billion was claimed in work-related expenses last financial year, and Mr Jordan said in a National Press Club speech in July that the tax gap for work-related expenses could be as high or higher than the corporate tax gap of $2.5 billion.
Mr Jordan told a Senate Economics Legislation Committee hearing on Wednesday that the random audits started 18 months ago and it had revealed “a number of errors” among work-related expense deductions.
“We’ve done a number of random inquiries of taxpayers to sort of test some of these claims … and that has shown quite a diverse range of issues,” he said.
Some of these included personal deductions that had no connection to the individual’s work.
“We’re trying to test some of the propositions,” Mr Jordan said.
The ATO has in recent weeks also launched a media blitz to remind individuals claiming work deductions of the limitations.
Mr Jordan said: “We can’t audit our way out of this, it’s millions and millions of people claiming this. So, we have to educate people.”
He said while individually, errors on claims amounted to small amounts, “there’s so many people claiming them [work-related expenses] that it actually is a very large amount”.
But Second Commissioner, Client Engagement , Neil Olesen later said there was no specific budget allocation for the work-related deduction focus by the ATO, and no revenue targets relating to it.
The random audits were being conducted to measure the tax gap – a theoretical number on how much money the ATO thinks is missing – rather than raise a specific amount of revenue.
If you require any assistance with work-related deductions, give us a call on (08) 9321 2642.
This information is provided to you by Fairfax Media WA Today (Date: 28 February 2018)