Facing the Senate Economic Legislation Committee, Australian Tax Office (ATO) second commissioner Neil Olesen rejected claims that its very public work-related expenses push was a ‘crackdown.’
“We're not calling it a crackdown, I wouldn't call it a crackdown, we're doing our job and our job is to make sure that people have the understanding they need to meet self-assessment in Australia,” said Mr Olesen, when pressed by Senator Chris Ketter.
“It's a complicated system and we provide a lot of focus and assistance to people to try and help them get it right when they fill in their returns.
“This is business as usual work so the effort we're putting here is effort we're not putting elsewhere so we don't have any target associated with this; we don't expect [there's] to be a change in revenue as a result of this.”
However, the ATO recently told Accountants Daily it has increased its investment into work-related expenses monitoring and compliance activity, which includes targeting tax agents which are deemed higher risk. This risk rating is often linked to the volume of work-related expenses they process.
Work-related expenses are a revenue drain for the government though, and late last year ATO commissioner Chris Jordan likened the tax gap created by illegitimate claims to the gap created by corporate tax avoidance.
Also facing the senate committee, Mr Jordan said the tax office started to take a dim view on ‘other’ work-related expenses around 18 months ago, while also hinting at the Bechtel employees at Curtis Island case as ‘patient zero’.
“It started probably a year or 18 months ago because we were doing some work in the gap analysis where we issued a gap for large corporates, the super guarantee, and we already did GST, and we were looking at small business, individual, black economy.
“In that work, part of international best practice is to do random audits or random inquiries. That turned up pretty startling results in terms of the number of errors so we knew this was an area that just needed a focus.
“You might recall that Bechtel matter on Curtis Island[;] we took the case to the Administrative Appeals Tribunal (AAT) and our proposition was endorsed and there was [sic] a few hundred if not a thousand or so employees [incorrectly claiming] and the other accountants in town were pretty dirty because word got around.”
The barbeque conversation
Mr Jordan was quick to reiterate that the tax office’s focus was on education and a need to change the perspective of tax payers and agents who were not keeping with the times.
“Some of these practices developed a long time ago. When mobile phones first came out, you used to get a monthly bill with every call itemised and costed and people would go through and look at what work ones were there,” said Mr Jordan.
“Now you have a $70 monthly plan which includes your data, your phone, unlimited text messages - well you were going to spend that $70 anyway so some people might still try to claim that $70 if they use their phone a little bit for work. You got rules and practices that were developed decades ago that technology sort of moved on from.
“If you're at a classic barbeque and people say 'I got all these deductions, you should go to my agent', that sort of spreads so we're reminding people that you don't get given deductions somehow, you have to have reason to claim those deductions that relates to your work,” he added.
“We can't audit our way out of this, it's millions and millions of people claiming this so we've got to educate people.”
Some industry stakeholders would prefer to see tools which measure work-related expenses improved, and thresholds possibly adjusted, to deal with newer work-related deduction challenges such as bundled phone plans.
Head of policy at Certified Practising Accountant (CPA) Australia, Paul Drum, fears that a blanket response to these challenges is on the cards.
“We are of course waiting on the data, but CPA Australia is concerned that if the commissioner can’t administer the current laws, there may well be a policy response required,” Mr Drum recently told Accountants Daily.