Increased ATO audit and review activity set to become more widespread

Australian Tax Office (ATO) audit activity and reviews are set to become more widespread

Audit reviews and activity are likely to become more widespread for individual taxpayers and small business, if recent activity by the ATO is to continue.

Recent Tax Office activity and the introduction of new regulatory measures point towards a spike in enforcement activity over the next few months.

Earlier this year, the government announced a fresh $1 billion funding boost to the ATO to extend the operation of the Tax Avoidance Taskforce and to expand the Taskforce’s programs and market coverage.

The tax office is launching a whistleblower hotline, encouraging people to ‘dob in business owners’ suspected of black economy activity as part of a broader effort to address Australia’s enormous small-business tax gap.

The hotline, first detailed by ATO deputy commissioner Deborah Jenkins, will go live on July 1 and focus on businesses who offer discounts for cash payments. The whistleblowing laws expand the range of conduct that can be reported on under protection and sets the stage for anonymous reporting.

The hotline is likely to be utilised in conjunction with a myriad of other efforts targeted at reducing the small-business tax gap, including impending changes to the Australian Business Number (ABN) system and efforts to stamp out dodgy cash-in-hand wages.

“We want people to contact us and tell us about instances where people might not be doing the right thing,” Jenkins told an audience of chartered accountants.

Chris Jordan (ATO commissioner) hinted toward a $10 billion tax gap in the small business sector, significantly larger than the corporate tax gap at $1.8 billion, and the individuals not in business tax gap at $8.7 billion.

On the individuals front, the Tax Office also recently applied to the Office of the Australian Information Commissioner (OAIC) to hold on to lifestyle assets data from insurers for a further two years.

“There has been a marked increase in job advertisements for various positions within the ATO, particularly within the black economy and Tax Avoidance Taskforce areas,” RMS senior manager Tracey Dunn said.

“The government committed over $1 billion of funding in the federal budget for ATO audit activity, and I fully expect we will start to see a marked increase in ‘please explain’ letters and audit activity over the coming months.”

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