Business owners and investors that seek to minimise their tax bill on income from investments or foreign sources could be in for a grilling from the taxman this end of financial year.
The Australian Taxation Office’s targets for the approaching tax return lodgement period were outlined by second commissioner Jennie Granger in a speech to the National Institute of Accountants NSW Congress yesterday.
High on the tax office’s hit-list will be the income tax arrangements of business owners, with tax declarations on the sale of assets and investments and foreign sourced income a particular focus.
“We have increased our enforcement activity – especially in pockets of blatant non-compliance which threaten the health and integrity of the system,” Granger said.
The audience of tax agents were told that employer compliance with superannuation contribution obligations on behalf of employees will also come in for scrutiny.
“A tip for your business clients with employees – we check superannuation responsibilities as well,” Granger said. “Employers need to be aware of their super guarantee and choice eligibility obligations, payments and due dates, and the steps they need to take if they don’t meet their obligations.”
Individual investors will also be in the taxman’s sights, particularly the more than 1.5 million Australians who claim rental tax deductions on investment properties.
The tax office has already collected some $5.6 million in extra tax revenue following 6800 reviews of rental property claims and, according to Granger, there will be more to come in the months ahead.
Property investors that make unusually high claims for rental deductions, have low rental income in relation to rental deductions, or that claim large amounts in interest or borrowing expenses are the most likely to come in for review.
Investor claims in relation to dividends and interest, capital gains on sale of investments or any involvement in “dodgy” tax avoidance schemes are also likely to get a tax office letter.
Granger says it still sees “rich pickings” in auditing capital gains declarations in relation to the sale of shares and property, despite already having collecting an additional $50.2 million from more than 6300 capital gains audits this year.
“We have reason to believe that compliance with capital gains tax is improving, but we also think there is still room for further improvement,” Granger says. “Improvements in data matching techniques and access to more data are making it much easier for the tax office to identify unreported gains on sales of investments.”
Executives and directors with very high incomes – above $1 million – and employees in occupations with above-average deductions for work expenses such as nurses, doctors and chefs will also receive greater scrutinty.
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