Diamond Accounting

01 10 09

After much government funding by the Rudd Government, the Australian Taxation Office is now increasing its audit investigations, predominantly targeting the wealthy and high income earners.

 

The ATO issued a target list for the 2008/2009 financial year, which included the following:

Small businesses - checking employer obligations, sale of assets and investments. Individuals with interest and dividends Rental property owners If you own a bank account overseas.

 

Tip

Please ensure that all interest and dividend income is declared in your 2008/2009 Income tax return and all supporting documentation is kept.

For property Investors, ensure that all records relating to your rental properties are kept, including:

- Annual rental statement from your agent

- All receipts of payments made in relation to the property, including council rates, water rates and insurance.

- Interest statements from your financial institution.

- All receipts of repairs relating to the property. Ensure that your accountant assesses whether it is a repair (deductible) or an improvement (capital) Depreciation reports by quantity surveyor.

 

The following occupations will be targeted during the 2008/2009 financial year:

- Engineers

- Miners

- IT Professionals.

Furthermore, the ATO has released its 2009/2010 compliance program. In relation to tax compliance for individuals, the ATO will be focusing on a variety of issues, including the following:

- Information matching - using this information to reduce the risks in relation to incorrect reporting of: employee share schemes, health insurance policies, tax offset eligibility and Medicare Levy exemptions.

- Foreign income - focusing on the correct reporting of foreign income (i.e interest received from overseas bank accounts, overseas dividends, pensions, salary or wages).

- Work Related Expenses - focusing on occupations with a pattern of large or increasing claims and returns that are not typical for particular occupations. These occupations include:

- Truck drivers

- Sales and marketing managers

- Sales representatives

- Electricians

- Capital Gains Tax record keeping requirements - focusing on attempts to offset capital losses against other income (note capital losses can only be offset against capital gains). The ATO will focus on checking property transactions to ensure that Capital Gains are reported correctly.

- Superannuation - focusing on illegal early release of superannuation benefits.

Lastly, but most importantly, if you receive a Highly Wealthy Individuals Entity Questionnaire, this is a preliminary risk assessment which can lead to a full audit.

If you receive one of these, seek advice from your accountant on completing it.

The ATO has nominated that there will be a substantial number of audits and risk reviews for ‘highly wealthy' individuals in the 2010 year.

As a final note, ensure that you have sufficient documentation to support all your income and expenses reported on your income tax return.

 

 

 

 

 

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