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Tax returns: act now to avoid the ATO’s technology trap tracking Australians hiding from the taxman

Sep 27, 2015

FAILING to lodge a tax return is costing Australians more than just a slap on the wrist.

Technology advances are giving the Australian Taxation Office unprecedented power to track transactions and catch people who don’t do their tax.

Criminal convictions, community service orders and being refused loans or Centrelink payments are among the ramifications, tax experts say.

It is believed that more than 10 per cent of Australians do not lodge tax returns even though they should, while the ATO says almost 20 per cent fail to lodge on time.

ATO assistant commissioner Graham Whyte said with little over a month left of tax time, “the message to people is not to procrastinate”.

“We don’t want people to get into the situation where we follow them up. Come to us before we come to you,” he said.

Deakin University senior lecturer in tax Adrian Raftery said the ATO was using data-matching technology to check people’s group certificates, bank accounts, share dividends and records of the sale of property and other assets.

RELATED: Five-minute tax returns create surge in DIY lodgement at ATO

Dr Raftery said letting tax returns slide could restrict access to government benefits, finance for loans, and result in late payment penalties and interest charges.

“Most people get a refund, so it’s money sitting there that doesn’t earn any interest,” he said.

NDA Law managing director Andrea Michaels said the ATO could track bank transactions and examine assets to make its own default assessment of the tax people owed.

Deposits into bank accounts over a certain amount get reported to the ATO,” she said.

“If they’re chasing you for a tax debt it goes on your credit history, and that can affect financing. If it’s a company or business there can be directors’ penalties put on you personally, and it can possibly affect things like Centrelink payments.

“The sooner you do it and face up to it, the better.”

The ATO’s Mr White said people who had fallen behind should contact the ATO and explain their circumstances.

Heavy penalties and prosecutions were only used for “cases where less formal approaches have not been successful”, he said.

“There are quite substantial penalties — generally a 75 per cent penalty — if we make a default assessment. It’s not something we do lightly.”

Mr Whyte said late lodgers could download tax return forms going back to 1984 and contact the ATO’s call centre, which could help provide information such as wage income or bank interest going back to 2008.

He said the ATO was monitoring all tax returns and was using technology and analytic models to detect higher-risk cases. Individuals have until October 31 to lodge their tax returns.

THE COSTS OF NOT LODGING

CASE 1: A 53-year-old man with child support obligations failed to lodge 10 income tax returns. He was convicted by a court, fined $7500 and ordered to lodge the returns. He did not comply and was prosecuted again, convicted of further criminal offences in March this year and fined a further $25,000.

CASE 2: A bakery employee avoided contact with the ATO for more than 30 years, not lodging tax returns and not getting a tax file number. As a result his employer was obligated to deduct the maximum tax rate — close to 50 per cent — from his wages for decades. He kept 33 years of group certificates in a box under his bed, and when it was finally sorted and the tax refunded, he retired the next day.

CASE 3: A 42-year-old plasterer did not lodge 12 tax returns and 115 monthly GST returns. He admitted his guilt, lodged all outstanding returns and was sentenced with criminal convictions. He was fined $8000 for the non-lodgement of personal tax returns and fined $70,000 for the GST returns.

Origianl article published in The Courier Mail on 27 September 2015

 

 

 

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