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ATO’s $8.7 Billion Tax Gap to Fill

It’s tax time… but with it comes an awoken Tax Office with promises to fill the $8.7 Billion tax gap which shook it last year.

The ATO has released its very first tax gap report for ‘Australians not in business’ and the news isn’t good. Tax gap analysis from the ATO has revealed the harrowing news and promises of reprimand quickly followed.  

The reason for this tax gap, in the words on the commissioner, are because of “errors relating to deductions ranging from genuine mistakes to deliberate over-claiming”. So, what does this mean for individual Australians this coming Financial Year? Targets from the ATO are as follows.

Claims For ‘Standard Deductions’

For those paying attention in their tax affairs, you would know that there are certain deductions for individuals which do not require receipts, these include:

  • $150 in laundry
  • $300 in work expenses
  • Travel allowances
  • Car Expenses (cents per km)

While you may not need evidence for these expenses, they are not simply free claims for Australians. The Commissioner at any time, can, and has promised to, ask taxpayers how their claims are deductible.

Home Office

The ATO has recently advised that a record number of taxpayers are claiming home office expenses, so the ATO has to ask itself, are more people working from home, or is something fishy going on?

A record $7.9 Billion in deductions for ‘Other Deductions’ was claimed last financial year, which includes home office claims. In addition, there has been a record number in mistakes with respect to these claims. Our advice, if you’re worried about getting this wrong, conduct your own research online and then come talk to us.

Air BnB

Air BnB is the newest major addition to the worlds gig economy, and Australian’s with a spare piece of real estate have been taking to it like there’s no tomorrow. But that doesn’t mean that you can make claims like there’s no tomorrow.

In the words of the Tax Office “we are using data matching to ensure claims are being made correctly through Air BnB”. While you may not think this would happen, in a recent case, an individual was listing their house on the platform and claiming all the expenses relating to running their property. Simultaneously, this Australian was ignoring all request to stay in the property and simply living their themselves. For reasons like this, one can understand why the ATO is looking into your Air BnB’s.

As a final word of warning, the ATO has promised to close their tax gap and crack down on Australians not complying with the law. To help them, the Federal Government has promised to give the ATO $130.8 Billion over the next four years in their endeavour to do so. Do yourself a favour and make sure you’re not caught in the middle of it!

Written for you by Chris Davies

The information contained on this website and in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website and in this article are of a general nature only and are based on our interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

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