There is expected to be a spike in the number of tax audits over the next 12 months, in light of increase data matching from the ATO.
The ATO have said that they are doing a lot of comparisons of databases and bank accounts from overseas. The ATO have linked interest and dividends but now they are starting to get a lot further, linking the databases to match property sales, to match high value car purchases and a whole range of things.
There have been a few cases where the ATO have looked at people buying international plane tickets and buying cars and comparing that to the actual income that they have earned and what they are declaring is not enough to cover their expenditure.
The omission of income has been a focus area of the ATO, having publicly stated that it will strive to recover an annual shortfall of nearly $1.4 billion caused by individuals who leave income out of their tax returns.
To help mitigate against the risk of an ATO review you may wish to consider tax audit insurance. If you would like any more information about this please contact Helen Bunford of our office on 9387 5637. Tax audit insurance generally covers professional fees incurred in dealing with ATO reviews.
Source: Accountants Daily