Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

SMEs, accountants reminded of top ATO surveillance area

Two mid-tier partners have reiterated warnings on the risk of making incorrect work-related expense claims in the lead-up to tax time, following the ATO indicating it will scrutinise all expense claims using data matching technology.

Tax&Compliance Lara Bullock 26 June 2017
— 1 minute read

ATO assistant commissioner Kath Anderson recently reminded accountants and SMEs that the ATO will be using real-time data to compare taxpayers with others in similar occupations and income brackets to identify higher-than-expected claims this tax time.

Advertisement
Advertisement

Speaking to Accountants Daily, HLB Mann Judd partner Peter Bembrick said that the ATO is taking work-related expense claims very seriously.

“The ATO has recently indicated that they will be closely looking at out of proportion work-related deductions due to the growth in the amount of work-related deductions,” he said.

“The ATO will also do some benchmarking: match with similar businesses and professionals.”

According to Mr Bembrick, incorrect claims can lead to interest and penalties.

“If you fail to indicate that all or part of the claim can be substantiated, penalty will be imposed on failing to take reasonable care,” he said.

“Usually this is 25 per cent of the tax shortfall and another 20 per cent penalty if you had been caught claiming unsubstantiated amounts earlier income years. Further these can lead to costly disputes with ATO.”

Matt Free, a business advisory partner at Moore Stephens, told Accountants Daily that penalties can in fact go above and beyond 25 per cent if the offence is more serious.

According to Mr Free the penalty can be 50 per cent of the shortfall where the taxpayer is found to show recklessness and an indifference to the inherent risk associated with such a claim, and 75 per cent of the shortfall for intentional disregard of the law that causes either an underpayment of tax or an over-claim of an entitlement.

Incorrect claims can also lead to wider and ongoing scrutiny from the ATO according to Mr Free.

“Such claims have the potential to have greater attention placed on the taxpayer in future years if found out by the ATO, potential for an audit of the entire tax return and related tax affairs,” he said.

SMEs, accountants reminded of top ATO surveillance area
image intro
accountantsdaily logo

 

Are you thinking of expanding your offering into SMSFs to grow your client base? Become a pro at SMSF fundamentals and make your clients bulletproof with the SMSF Foundations course. Learn directly from Aaron Dunn from Smarter SMSF as he deep-dives into the fundamentals you need to know to successfully undertake your work as an SMSF practitioner. Earn up to 21 CPD hours! Learn more

Tax&Compliance