With over eight million Australians claiming work-related expenses each year, Assistant Commissioner Graham Whyte is reminding people to make sure they get their deductions right this tax time.

“Australians claim over $21 billion in work-related expenses each year, and we want to support taxpayers to claim what they are entitled to – no more, no less,” Mr Whyte said.

“Most Australians want to do the right thing, but we are seeing mistakes, and while the amounts at an individual level are relatively small, collectively the overall impact is significant. That’s why, it is important for people to get their deductions right.

“From time to time we see people deliberately making incorrect claims. We’ve seen claims for car expenses where log books have been made up and claims for self-education expenses where invoices were supplied for conferences that the taxpayer never attended.

“Deliberately making incorrect claims is an easy way to get into some serious trouble. It’s just not worth it.”

Mr Whyte said while most tax agents are there to help you do the right thing, sometimes the ATO identifies tax agents offering special deals, inflating claims to generate larger refunds.

“If it sounds too good to be true – it usually is. The ATO takes action against tax agents who make dodgy claims, but to protect yourself, make sure your tax agent is registered. You can check on the Tax Practitioners Board website.”

Mr Whyte said in 2014-15, the ATO conducted around 450,000 reviews and audits of individual taxpayers, leading to revenue adjustments of over $1.1 billion in income tax.

“Cases involved omitted income or over-claimed entitlements like deductions. This included people making claims significantly different to those made by taxpayers in similar circumstances,” Mr Whyte said.

“Every tax return is scrutinised using increasingly sophisticated tools and data analytics developed by our ‘Data Doctors’ at the ATO. This means we can identify and review income tax returns that may omit information or contain unreasonable deductions.

“When a red flag is raised, our staff investigates further and if your claims seem unusual we will check them with your employer.

“If you’ve made a mistake, this will hold up the processing of your tax return, so it’s best to make sure you claim the right deductions from the start.”

My Whyte said this year the ATO has introduced real-time checks of deductions for tax returns completed online.

“If your claims are substantially higher than others in similar occupations, earning similar amounts of income, a message will appear, asking you to check them. This new process is just about helping you to make sure your claims are correct,” Mr Whyte said.

“If you are doing the right thing you have nothing to worry about. If you make an honest mistake we will help you fix it up and correct your tax return. We will not penalise you if you genuinely tried to get it right.

“But, if you didn’t make a reasonable or genuine attempt to get it right or are intentionally doing the wrong thing, you may receive a penalty.

Mr Whyte said it was easy to keep on the right track with your work-related expense claims by remembering three golden rules.

“One, make sure you spent the money yourself and were not reimbursed. Two, make sure it is related to your job, and not a private expense. Three, keep a record to prove it,” Mr Whyte said.

“We’ve got a range of guides including specific occupation guides on our website to help people understand what they can claim. If you use a tax agent, you can also ask them for advice on the right things to claim.

“You can also make it easier on yourself by using the myDeductions tool in the ATO app to record your work-related expenses on the go. You can then upload directly into your next tax return just like your pre-filled information.”

Source: https://www.ato.gov.au/Media-centre/Media-releases/ATO-exposes-dodgy-deductions/

The ATO are hosting free webinars to help small businesses understand SuperStream and how to prepare for it.

The SuperStream deadline for small businesses was 30 June 2016.  The ATO have provided compliance flexibility until 28 October 2016 for small businesses who are not yet ready.

The ATO webinars run for around 40 minutes, consisting of a presentation and live Q&A session.

The next webinar is on Wednesday 17 August at 11am.

Source: https://www.ato.gov.au/Tax-professionals/Newsroom/Superannuation/SuperStream-webinar/

Statement by Glenn Stevens, Governor: Monetary Policy Decision – 02/08/2016

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.50 per cent, effective 3 August 2016.

The global economy is continuing to grow, at a lower than average pace. Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies. Actions by Chinese policymakers are supporting the near-term growth outlook, but the underlying pace of China’s growth appears to be moderating.

Commodity prices are above recent lows, but this follows very substantial declines over the past couple of years. Australia’s terms of trade remain much lower than they had been in recent years.

Financial markets have continued to function effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.

In Australia, recent data suggest that overall growth is continuing at a moderate pace, despite a very large decline in business investment. Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend. Labour market indicators continue to be somewhat mixed, but are consistent with a modest pace of expansion in employment in the near term.

Recent data confirm that inflation remains quite low. Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.

Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 is helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes.

These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.

Supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished.

Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.

Source: http://www.rba.gov.au/media-releases/2016/mr-16-18.html

If your taxable income is under the tax-free threshold you may still need to lodge a tax return.

Common reasons for this include:

• Are entitled to the private health insurance rebate but did not claim the correct entitlement as a premium reduction
• Had pay as you go (PAYG) withheld from payments received during the year
• Had a reportable fringe benefits amount on your PAYG payment summary
• Had reportable employer superannuation contributions on your PAYG payment summary
• Made a loss or can claim a loss made in a previous year
• Were an Australian resident for tax purposes and had exempt foreign employment income and $1 or more of other income
• Were a liable or recipient parent under a child support assessment unless you received one or more Australian Government allowances, pensions or payments for the whole year and your income was less than $23,752

Source: https://www.ato.gov.au/Tax-professionals/Newsroom/Income-tax/Low-income-earners-may-need-to-lodge/

The ATO has today launched Project Super Scheme Smart, an initiative aimed at educating advisers and individuals about the potential pitfalls of retirement planning schemes.

The program – which forms part of the ATO’s broader focus on tax avoidance schemes – provides targeted information for financial planners, accountants, and other advisers to help them identify, avoid and report illegal schemes.

ATO Deputy Commissioner, Michael Cranston, said the ATO had considerable success to date in shutting down tax avoidance schemes but recently had seen an increase in schemes designed specifically to target those approaching retirement.

“Retirement planning is a critical and exciting time in people’s lives as they work out how they’ll manage their finances after they leave the workforce. For many, they rely heavily on the advice of financial planners, accountants, and other advisers.

“Unfortunately, promoters of these risky schemes are aware of the role that advisers play at this critical time and are targeting advisers to get their assistance in recommending schemes to clients,” Mr Cranston said.

According to the ATO, people most at risk of being targeted are those approaching retirement. This can mean anyone aged 50 or over, looking to put significant amounts of money into retirement, particularly self-managed super fund (SMSF) trustees, self-funded retirees, small business owners, company directors and individuals involved in property investment.

There are a number of schemes currently targeting Australians planning for retirement. Some current examples, the ATO is concerned about, include:

• Dividend stripping – Where the shareholders in a private company transfer ownership of their shares to an SMSF so that the company can pay dividends to the SMSF. The purpose being to strip profits from the company in a tax-free form.
• Non-arm’s length limited recourse borrowing arrangements – When an SMSF trustee undertakes limited recourse borrowing arrangements (LRBA) established or maintained on terms that are not consistent with an arm’s length dealing.
• Personal services income – Where an individual (usually at pension phase) diverts income earned from personal services to a self-managed superannuation fund (SMSF) where it is concessionally taxed or treated as exempt from tax.

“The ATO wants to play its part in ensuring soon-to-be retiring taxpayers protect their nest eggs.

That means working closely with the individuals but also with their trusted advisers. In order to put a stop to these schemes, we are encouraging people to come forward if they believe they are at risk, are already involved in a scheme or believe their clients are.”

Promoters of retirement planning schemes may incur significant punishment including prosecution and where intermediaries are found to have been encouraging clients to adopt these arrangements, the ATO will consider the application of the promoter penalty laws. The ATO may also consider referring the matter to the Tax Practitioners Board.

Mr Cranston concluded: “We want to work with you to help protect your clients’ retirement nest eggs from unwanted predators.

Source: https://www.ato.gov.au/Media-centre/Media-releases/ATO-warns–avoid–too-good-to-be-true–tax-schemes/

In the 2016-17 Budget it was announced that from 7.30pm (AEST) on 3 May 2016 there will be a lifetime cap of $500,000 on non-concessional superannuation contributions.

The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007.

The lifetime cap will be indexed to the Average Weekly Ordinary Time Earnings (AWOTE), increasing in $50,000 increments.

If an individual has exceeded the cap prior to commencement, they will be taken to have used up their lifetime cap but will not be required to take the excess out of the superannuation system.

If an individual makes contributions after commencement that causes them to exceed their cap they will be notified by the ATO to withdraw the excess from their superannuation account.

Individuals who choose not to withdraw the excess amount will be subject to the current penalty arrangements.

Non-concessional contributions made into defined benefit accounts will be included in an individual’s lifetime non-concessional cap.

If you need to know how much you have contributed into your super fund to ensure you don’t exceed the superannuation contribution caps, please contact the ATO on 13 10 20.

Source: https://www.ato.gov.au/General/New-legislation/In-detail/Super/Introduce-a-lifetime-cap-on-non-concessional-superannuation-contributions/

The ATO is reminding Australians to protect themselves against identify theft this tax time.

Assistant Commissioner Graham Whyte said identity theft was more common during tax time because of the large number of people lodging tax returns.

“With the amount of personal information being exchanged at tax time, it is a prime opportunity for fraudsters,” Mr Whyte said.

“Highly organised crime networks use a range of methods to steal personal information in order to commit refund fraud.”

In 2014-15, 32,110 cases of identity theft were reported to the ATO. Of these, 22,200 were reported during the peak processing months from July to November.

Over the same period, 677 incidents of identity crime relating to refund fraud were dealt with by the ATO.

Mr Whyte said there are a number of ways Australians can protect themselves against identity theft and refund fraud. It can be as easy as putting a padlock on your letter box or ensuring you have the latest software and security updates on your computer.

“My number one tip is to protect your tax file number by deleting or destroying any record of it from documents before throwing them away. When you contact us or submit a form, we use your TFN to identify you. Fraudsters try to steal TFNs and other personal information so that they can lodge tax returns and other tax forms.

“And just like you would with online banking, you should never share your passwords with anyone and ensure you change them regularly,” Mr Whyte said.

“Although there are a few things you can do to protect your own identity, you can also be confident that we’re doing everything within our power to keep your personal details safe and secure.

“For example, just like your bank, the ATO will now send you a ‘Was this you?’ message via SMS or email when your ATO online account is linked to another myGov account.”

Mr Whyte said while the ATO had seen an increase in identity crime related to refund fraud; new technology is helping it to catch fraudulent behaviour earlier than ever.

“We’re using sophisticated analytics to uncover acts of identity crime and refund fraud, and consistently monitor our online systems to pick up any instances of unusual activity.

“Our systems help us stop incorrect, invalid or fraudulent refunds before they are paid out. This includes placing extra security checks on accounts or adding fraudulent bank accounts to watch lists so refunds will not issue.

“If we think a person’s identity has been compromised, we get in touch with them. Our Client Identity Support Centre provides support to taxpayers who have had their identities stolen, misused or otherwise compromised.”

Mr Whyte said where the ATO uncovers fraudulent activity; it works with law enforcement and other agencies to take action.

“We provide the Australian Federal Police and the Australian Competition and Consumer Commission with relevant intelligence and information on any suspected instances of identity crime.

“This is an ongoing relationship where we provide intelligence and support on a continual basis, rather than formal referrals at a point in time. The ATO is often only a part of a much broader identity crime issue, and prosecutions reflect the broader nature of these crimes.

Source: https://www.ato.gov.au/Media-centre/Articles/ATO-warns-against-identity-theft/

Eligibility for the zone tax offset changed on 1 July 2015.

From 1 July 2015, you can claim the zone tax offset if your usual place of residence was in a remote or isolated area (known as a zone) during the income year.

If your usual place of residence was in a zone for less than 183 days in the income year, you may still be able to claim the tax offset, as long as your usual place of residence was in a zone for a continuous period of less than five years and:

• you were unable to claim in the first year because you lived there less than 183 days
• the total of the days you lived there in the first year and the current income year is 183 or more. The period you lived in a zone in the current income year must include the first day of the income year.

Any discretion exercised by the Commissioner for the zone tax offset will be made with reference to your usual place of residence.

Source: https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Zones-and-overseas-forces/

On 1 July 2016, fuel tax credit rates for:

• heavy vehicles that use taxable fuel such as diesel or petrol, and travel on public roads, increased to 13.6 cents per litre – this change is due to a decrease in the road user charge
• biodiesel and fuel ethanol manufactured in Australia changed, as excise duty rates took effect for biofuels.

Remember to apply the correct rate when you calculate the fuel tax credit claim on your business activity statement (BAS).

Fuel tax credit rates are indexed twice a year, in February and August, in line with the consumer price index (CPI).

If you use heavy vehicles mainly off public roads, your vehicles may be on the list of heavy vehicles that the ATO considers are used fully off public roads – for example, harvesters or bulldozers.

You can also use the ATO’s online tools to help calculate fuel tax credit claims and work out which business activities are eligible.

Source: https://www.ato.gov.au/Business/Large-business/In-detail/Business-bulletins/Articles/Fuel-tax-credit-rates-change-from-1-July-2016/

If you are claiming work-related expense deductions, you need to satisfy the following:

• must have spent the money and were not reimbursed
• it must be related to your job
• must have a record to prove it

It’s important to remember that if you receive an allowance from your employer, it does not automatically entitle you to a deduction. You still need to show that you have spent the money and it was related to your job.

The ATO will be paying extra attention to people whose deduction claims are higher than expected, in particular:

• car expenses claims including those for transporting bulky tools
• travel
• internet and mobile phone
• self-education

Source: https://www.ato.gov.au/Tax-professionals/Newsroom/Income-tax/Claiming-work-related-expenses-/