ATO says there is a tax gap of $8.7 billion and taxpayers are underpaying about $906 a year
AUSTRALIA has been accused of being a nation of tax cheats, deliberately or carelessly underpaying the taxman $1000 each every year.
NSW
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AUSTRALIA has been accused of being a nation of tax cheats, deliberately or carelessly underpaying the taxman $1000 each every year.
The Australian Taxation Office estimates the country has a “tax gap” of $8.7 billion — or an average $906 — based on hundreds of random audits undertaken last year.
In an unprecedented move, tax authorities will today release those figures covering 9.6 million taxpayers.
They warn at least 200,000 people are believed to be aggressively and deliberately overclaiming expenses and failing to properly declare their income. Many more make smaller errors that result it overclaiming.
Alison Lendon, a deputy tax commissioner, said more than 70 per cent of audited returns had uncovered errors, and new technology was being rolled out to close the gap.
“What we have seen is that most people make small, but avoidable errors so we will ramp up our assistance to help these people understand their obligations and get things right,” Ms Lendon said.
“A smaller number of people are deliberately doing the wrong thing — that has a significant impact on revenue.
“These people can expect closer attention from us, especially this tax time.”
New ATO technology this year will prompt accountants if they enter work-related expenses for their clients which tax authorities think are out of the ordinary.
But Ms Lendon also warned a number of accountants on the ATO’s watch list had been “deliberately overclaiming, hiding incomes and falsifying documents” for clients.
In comparison to the tax gap for individuals, the ATO says the figure for large companies is about $2.5 billion — or 5.8 per cent of tax paid.
“The ATO will continue to focus on multinationals and large corporates, where in the last three years we have already made substantial progress from a strong base,” Ms Lendon said.
Paul Drum, the head of tax policy for CPA Australia, said the tax gap figure was “remarkable” and “much bigger than any of us expected”.
“It strikes across the whole tax system, because some of the things is individuals leaving out income, and for tax agent prepared returns, it could be anything from misunderstanding the law to intentional disregard and even fraud,” he said. “There are certain limits for where the substantiation requirement is less, and taxpayers are treating these limits as a standard deduction whether they had incurred it or not or whether it related to their work or not.”