The Australian Tax Office’s Annual report for 2017/2018 was released just prior to the deadline for this year’s tax returns on 31 October 2018, which millions of Australians have not yet filed.
The Report detailed the fact that Australians are now in more debt to the ATO than ever before, sparking warnings from experts that a major crackdown is on the way.
Collectable debt has surged to a record $23.7 billion in the last financial year, up from $20.9 billion in 2016-17, the report reveals.
Technological advances are one driver behind the increase in net tax collections. They have allowed the ATO to use real-time analytics to send ‘nudge’ messages to approximately 230,000 taxpayers (or nearly 7% of myTax users) while they were preparing their return in myTax, asking them to review specific items.
As a result, lodgers made adjustments estimated to have caused them to pay almost $24 million in additional taxes.
Australians are choosing to self-prepare Tax lodgements more than ever before, with myTax usage increasing 9% on 2017, representing 20% of the 17.4 million electronic Lodgments received. Only 66% of taxpayers who used online services were satisfied with ATO performance.
Speaking with qualified Taxation Lawyers and Accountants can help develop the optimal strategy around tax time and for the year ahead.
On-time lodgments of income tax returns increased to 83% as a result of tax time messages and stronger enforcement.
The Report shows how sophisticated and clever the ATO can be in how they use their data.
The ATO now uses automated programs that identify and correct errors once a return is lodged and checked against the third-party data they receive receive.
They are using improved data sources to identify emerging issues in decentralised platforms such as Uber and Air BnB to prioritise and tailor tax collection using data intelligence, patterns and trends.
For Dr Adrian Raftery, a tax specialist and Deakin Business School associate professor,
“It is not a mere coincidence that the increase in tax debt has come at the same time that there has been a 11 per cent reduction in audits and reviews by the ATO since 2015/16,” he told nine.com.au.
“Whilst the taxman hasn’t necessarily fallen asleep at the wheel, it certainly has taken its eyes off the road for a while and given taxpayers a bit too much leeway in paying its debt.” Dr Raftery said taxpayers should expect a crackdown as the ATO seeks to claim what it’s owed.
A majority of the tax owed is from small businesses, and the biggest driver in net tax collections was growth in company collections, up $16 billion on 2016–17.
Here at Irish Bentley Lawyers we know that taxpayers, particularly small businesses, sometimes have cash flow issues and can’t pay their tax on time; we work with you develop the optimal strategy for overcoming these issues.
Dr Raftery said that “There is no doubt that I expect more activity from the ATO debt collectors in the coming months. If you are not quaking in your boots, the ATO will soon be shaking them to get the cash that you owe them.”
“They are employing external debt collection agencies and with small businesses, they could include tax debts on credit reference scores. And they have quite a well-planned campaign of letters and phone calls. Your tax debt is not something you can ignore.”
“For those that do have a tax liability – perhaps due to some untaxed income like interest or capital gains – then it is imperative that you lodge on-time as the ATO can sting you twice. Once for late lodgement ($210 per month up to five months) and secondly a late interest penalty currently calculated at 8.77 per cent per annum,” Dr Raftery said.
Do you have outstanding Tax? We can help!
Irish Bentley Lawyers have considerable experience in Australian taxation law.
Call us today to have a consultation with one of our specialised Taxation Experts. We can help guide you through any ATO process and put you in the best position possible.
Please note that the above does not constitute legal advice and Irish Bentley Lawyers make no representations or warranties as to the accuracy of any of the information contained herein. If you have a taxation issue, then please do not hesitate to contact the team at Irish Bentley Lawyers – there is no substitute for proper legal advice based on your individual and unique circumstances.
For more information on the above story, check out: https://finance.nine.com.au/2018/10/30/16/47/crackdown-looms-as-australians-owe-record-24-billion-in-tax.
Written by
Matthew Brouwers (LL.B, GDLP, B.BM)
SOLICITOR