The Australian Tax Office says it will be tripling the number of audits it conducts on individuals, as it looks to close a gap of close to $9 billion in lost tax revenue. The ATO says the biggest problem is people falsely claiming work-related and rental property expenses.
Whether it's a simple mistake on a tax return or those deliberately cheating the system, around six per cent of individual tax claims are wrong.
The Australian Tax Office (ATO) has found $8.7 billion has been lost from tax revenue from individuals alone, with seven out of the ten returns audited having at least one error.
The gap from individuals has also been found to amount to more than three times the loss from large companies.
ATO spokesman Neil Olesen says the tax office will be looking to get that money back.
"We, of course, would much rather it was a smaller figure. I think most Australians don't understand, and that's what's new about this information, is that all those little amounts where they make errors can add up to a big amount. And so what we're asking Australians to do, particularly at this tax time as they complete their returns, is to take a little bit of extra care as they do their return."
Mr Olesen says the biggest problem has been from people claiming work-related expenses and expenses relating to rental properties.
He says there is a simple method to avoid mistakes.
"Well we encourage people to follow the three golden rules when they fill in their tax return: You've got to have actually spent the money and not have it reimbursed by your employer; it needs to relate to your income and not be of a private nature; and you need to have a record of that expense. So a lot of the common errors we see are sometimes the people haven't spent any money at all. And very frequently we find people that don't have the records to back up their claims."
At 25-years-old, Ben de Klerk juggles two jobs and looks forward to tax time for the return.
He says he lodges his returns online.
"I think being employed across two jobs complicates it a little bit but I don't have an investment portfolio. I don't have an ABN where I have to declare external sources of income. So it's very straightforward, in terms of getting a payment summary at the end of each year from both employers. Knowing how much is being deducted across the year is easy to fill out."
The A-T-O says people doing their own tax had a lower rate of errors than returns prepared by tax agents.
The Institute of Public Accountants' chief executive, Andrew Conway, says while there are some rogue agents, most do the right thing.
"Where there are cases of tax agents doing the wrong thing, we say as a professional body that we don't want you in our profession, that the ATO will come after you. We as a professional body will come after you, to identify you and get you out. But they are a very small number of agents in our system."
The Institute is now warning Australians as they prepare to lodge their tax return to not to mislead their agents in order to maximise their return.
Mr Conway says honesty is the best policy.
"Make sure you do your homework. Research your tax agent and ask appropriate questions about your return because it's based on your information. But critically, be warned because the ATO are chasing an 8.7 billion dollar carrot and they are on the prowl. So make sure that as a tax-payer, you're aware of your obligations and ask the appropriate questions of your tax agent about your tax return."
The ATO says it will be using additional funding from this year's budget to triple the number of audits it conducts.
