October 28, 2022

ATO to Target Individual Taxpayers over Shortfall

Work expenses, omitted income and rental property claims have been called out as key ATO targets to narrow the $8 billion-plus gap between what individuals pay in tax and what the ATO believes they owe.

The three focus areas would be subject to increasing data scrutiny with special attention on the 90 per cent of rental claims that needed adjustment, according to the ATO.

The ATO estimate that individuals are paying about 94 per cent of the tax they should be at lodgement, so prior to any intervention.

Incorrect claims in regards to work related expenses account for almost $4billion of the tax gap – almost half the total tax gap related to individuals.

Another problematic area was omitted income, particularly cash wages and income from the sharing economy and various gigs, which the ATO estimated to be worth $1billion a year in unpaid tax.

Finally, the most problematic area was the third category, property investments. The ATO estimates this contributed about $1billion to the net tax gap. The ATO ran a random inquiry program in relation to 2021 Tax Returns and this showed that 9 out of 10 returns reporting net rental income require an adjustment.

Source: Accountants Daily

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