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ATO’s 2017 Audit Hot Spots

ATO’s 2017 Audit Hot Spots

For Individuals

The ATO is increasing their audit focus on the following areas:

  • Unusually high work-related claims – The ATO is contacting employers to verify possible work-related claims.  The employer will need to verify what is expected of the employee, for example using their own vehicle to travel to different job sites.
  • Major review of reasonable travel allowance expense claims.
  • Increasing the compliance on rental property deductions.  They will be looking at travel costs, claiming holding costs (costs incurred while the property is being built) and excessive claims for holiday homes, weekend retreats etc.  Also, whether a property is truly available for rent.  By not listing with an agent, proper advertising, too stringent of conditions placed on potential tenants can deem a property “not truly available for rent” and therefore deductions could be disallowed.
  • “Lifestyle Assets” – data matching with insurance companies eg boats, caravans etc which do not match with the client’s reported income.  Possible non-compliance with income tax, GST, FBT, CGT.

For Business

  • The ATO will be targeting Uber and Airbnb operators.  The ATO will focus on under-reported cash income. For Airbnb operators –  any Capital Gains Tax arising from disposing of their property and the property was generally available for rent.  For Uber drivers – GST and income tax is subjected on the gross fare and that they are complying with all legislative requirements.
  • Small Business – In particular, where some individuals continue to split their Personal Services Income (PSI) with an associate to lower their tax debt.

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