ATO – What attracts our audit attention
To help you taxpayers get things right, you should consider the behaviours, characteristics and tax issues t
The Australian Taxation Office (ATO) is reminding taxpayers there are serious consequences if they choose not to meet their tax obligations this tax time.
Assistant Commissioner Kath Anderson said most Australians want to do the right thing, but some refuse to pay their share, or pay at all.
“In the first instance we always try to help and educate taxpayers about how to get their tax right. Unfortunately in some cases people don’t respond or deliberately make false statements to avoid paying the right amount of tax – and we have to pursue this,” she said.
Ms Anderson said the ATO has sophisticated systems and analytics that ensure wrongdoing can’t fly under the radar. If a claim raises a red flag in the system, auditors will investigate further.
“In 2015–16 for individual taxpayers we conducted around 450,000 reviews and audits, resulting in adjustments of nearly $1 billion in income tax, and prosecuted over 1,300 taxpayers,” Ms Anderson said.
“Criminal investigations and prosecution are a last resort and not something we take lightly. However, Australians expect us to make sure nobody gets a free ride and we are prepared to use all the avenues available to us to protect the integrity of the tax system.
“Our message to all taxpayers is that the ATO takes firm action against those who actively choose to ignore their obligations or try to game the system.”
Ms Anderson said the ATO uses a range of strategies to manage taxpayer transgressions, ranging from help and education, to audits and even prosecution through the court system for more serious cases.
“When choosing a course of action, we consider a number of factors including a taxpayer’s history of compliance, and the number of chances we’ve already given them to get back on track with their obligations,” Ms Anderson said.
“The decision to prosecute is only made if we have exhausted other options to get the taxpayer to change their behaviour and correct their affairs.”
The ATO is aware some people are willing to take risks and falsely claim work-related expenses. Ms Anderson said taxpayers considering risky claims should be on notice that the ATO is serious about dealing with non-compliance, and the consequences can be costly for those found to be doing the wrong thing.
“In the worst cases a penalty can be up to 95% of the tax shortfall amount. For example, we took a taxpayer to court over his false car work-related expense claims in two consecutive years, and he was ordered to pay more than $4,000 in fines and court costs,” Ms Anderson said.
“In another instance, a taxpayer had neglected to lodge his tax returns over a 12-year period despite being given a number of opportunities to comply. After being fined more than $100,000 and still failing to get his tax affairs in order, he was handed down an eight month suspended sentence.
“The vast majority of Australians do the right thing, which is why we will pursue those who try to dodge their obligations. Our message to anyone thinking about making a false deduction, omitting income or not lodging at all is that it just isn’t worth running the risk of audits, fines or prosecutions.”