It could be you
The Tax Office is losing its patience. After years of watching work-related deductions climb to become one of the largest categories of tax claims, its begun an aggressive program of profiling aimed at targeting suspected cheats.
Unveiling the 2009-10 Compliance Program, Second Commissioner Bruce Quigley told the Herald the Office is sending letters to 400,000 suspects alerting them to their pattern of unusually large or growing claims.
"There are so many of them that we can't audit the lot. We are auditing the worst and issuing letters to the rest saying we are taking a very very close look," Mr Quigley says.
"In the past when a taxpayer has received a letter like that, their claims drop 27 per cent."
The Office will be singling out for special attention truck drivers, electricians, marketing managers and sales representatives...
because of rapid growth in their claims for vehicle expenses. But anyone claiming mobile phone expenses, internet expenses or home office expenses will be under increased scrutiny.
Self-managed super funds are also in the spotlight with the Tax Office concerned that "in certain immigrant communities" promoters are selling schemes too good to be true purporting to free them from the need to make contributions.
"We are working closely with the super funds who are losing business as well as the banks and intelligence agencies such as AUSTRAC and getting quite successful in freezing the transfers," Deputy Commissioner Neil Olesen says.
"We have identified a dozen of these promoters so far and we've got a major one before the courts due to be sentenced at the end of this month."
Tradespeople have for some time been singled out for special attention with the use of "benchmarks," for bricklayers, concreters, floor sanders and house painters - a program the Office is about to spread more broadly.
"For new work the cost of the paint as a percentage of what's charged to the customer should be about 30 per cent," says Deputy Commissioner Mark Konza. "Painters now know that if they buy a certain amount of paint the Tax Office is expecting them to charge three and a third times that much to the customer."
"So far we have prepared these ratios for 13 occupations. In September we'll unveil them for another 50, and eventually we'll have 100."
Businesses that suddenly become late in handing over Pay As You Go collections will receive early attention. "We have found in past economic downturns that businesses in trouble suspend payments, and then it becomes hard to bring them back, says Mr Konza.
Further up the scale the Office will be alert to the practice known as "transfer pricing" where businesses doing badly overseas transfer Australian profits offshore to write off in other tax systems.
Treasurer Wayne Swan is backing the measures, saying Australians who work hard "have every right to expect everyone pays their fair share".
But he says the program also includes compassionate measures to help
taxpayers in trouble.
Think twice before claiming that deduction
The 2009-10 Hit List
. Truck drivers
. Marketing managers
. Sales representatives
. Travel expenses
. Internet expenses
ATO Compliance program 2009-10
Published in today's SMH and Age