Taxman has a bigger stick
PEOPLE who make a mistake with this year's tax return - deliberate or accidental - are risking a big increase in financial penalties.
PEOPLE who make a mistake with this year's tax return - deliberate or accidental - are risking a big increase in financial penalties.
The Australian Taxation Office has increased the size of its penalty units by 55 per cent this year, from $110 to $170, but financial experts say there are simple ways to avoid getting stung.
The ATO says the most common penalty calculated in these units is failure to lodge on time, and the increase, for breaches that have occurred since December 28 last year, is the first rise in penalty values since 1997.
"For most taxpayers, the penalty for failing to lodge income tax returns or activity statements on time could be as high as $850 a document," an ATO spokeswoman says.
"The penalty for not lodging is calculated at one penalty unit for each 28 days or part thereof that the document is overdue, up to a maximum of five penalty units."
The latest ATO annual report shows it collected $564 million in penalties in 2011-12, up 109 per cent year-on-year, and $2.4 billion in interest.HLB Mann Judd tax partner Mariana von-Lucken says she has noticed an increase in penalty activity.
"They are getting more serious - they are starting to impose it more," she says.
Even somebody who does not lodge a tax return but is owed a refund is still technically liable for penalties, von-Lucken says.
She says technology has improved the ATO's surveillance efforts and taxpayers need to be more careful.
"With pre-filling, the ATO has got the information about your salary, wages, interest and dividends - it automatically gets generated for them."
Impact Financial Coaching director Allan Ward says anybody unsure about their taxes should get good advice from an accountant or financial planner to avoid mistakes.
"The ATO uses data matching with your tax file number so it's going to get picked up," he says. "If you are keeping good records and getting sound advice, you can be pretty confident you are not going to fall foul of the ATO."
Ward says Australia's self-assessment tax system means that, just because you claim a deduction and it gets through the ATO one year, it doesn't mean that it's a legitimate deduction, and may get picked up at a later date: "Your accountant can report what you give them to report but you are ultimately responsible."