Tax time: ATO chief signals crackdown on fake work expense claims

THINKING of fudging your tax return deductions? Think again. The ATO is cracking down on fake claims that could be costing billions. Here’s what you should know.

The Australian Taxation Office is cracking down on fake claims that could be costing Australia billions of dollars.

THINKING of fudging your tax return work expense deductions? Think again.

The Australian Taxation Office is cracking down on fake claims that could be costing Australia billions of dollars.

As tax time kicks off, Commissioner of Taxation Chris Jordan sent a timely warning to Australians today to ensure their claims were above board in a major speech in Canberra.

The ATO has uncovered “many errors” and over-claiming for work-related expenses in a series of “startling” random audits in the lead up to tax time.

Tax Commissioner Chris Jordan has sent a timely warning to Australians to ensure their claims are above board in a major speech in Canberra. Picture: AAP

Areas where record keeping requirements have been simplified, such as clothing and laundry expenses or the per kilometre measurement for car expenses, will be a major target in the crackdown.

The office had yet to settle on an estimate of what the fake claims were costing the nation but it could be billions of dollars given the total deductions for work related expenses alone was about $22 billion.

“Around 6.3 million people make claims for clothing expenses, totalling almost $1.8 billion,” Mr Jordan said.

“That would mean that almost half of the individual taxpayer population was required to wear a uniform ... or protective clothing, or had some special requirements for things like sunglasses and hats and a variety of other things. Half the population.

“While many of these claims are legitimate, I do wonder how many people have simply assumed that they can claim this $150, or this $300, without having to actually have spend that amount of money.”

Mr Jordan said individuals making fake claims were likely to cost the country much more than big businesses. Picture: AAP

Big businesses rorting the system by overclaiming were judged to cost the nation about $2.5 billion but Mr Jordan said individuals making fake claims were likely to cost the country much more than that.

He said individuals’ deduction claims, which amount to $36 billion, and rental income related expenses, which amount to about $44 billion, would be something the ATO would focus on.

The ATO would also turn the spotlight on small businesses, the black economy and so-called phoenix operators over the next year.

Mr Jordan also addressed a string of “unprecedented” website outages that have plagued the ATO in recent months, as well as the Plutus payroll scandal.

More than 200 entities are believed to be involved in the tax evasion scam which has seen a number of people so far been charged over the alleged fraud, including Adam and Laura Cranston, the children of former ATO deputy commissioner Michael Cranston.

Adam Michael Cranston (right), the son of now former Australian Taxation Office (ATO) deputy commissioner Michael Cranston, leaves the Supreme Court in Sydney. Picture: AAP

Mr Jordan defended Mr Cranston today, saying authorities did not believe he had been involved in the scandal, and highlighted that the ATO had an “extremely low incidence of fraud”.

But he said the ATO had been “dismayed” at how events had unfolded.

“The connection with and alleged actions because of his son have ruined his career and his reputation and have compromised our standing and raised questions about the integrity of others within the ATO,” Mr Jordan said.

“This is a precarious situation.

“I am keen to defend the ATO but I am looking into whether controls and systems need to be bolstered.”

On the website outages, he said a review of the ATO’s infrastructure had been launched.

“We are well aware that if we are to offer and to encourage the use of digital services, then we have to have our systems available when people need them.”

Originally published as Tax time: ATO chief signals crackdown on fake work expense claims