Does Your Tax Return Match What the ATO Expects to See?
Posted on: 1 July 2021
While nobody likes to fill in a tax return at the end of the financial year, this is no reason to breeze through the task as fast as possible to get it out of the way. It's crucial to be as careful as possible to ensure that you are minimising your tax liability and claiming the proper credits—and avoiding any potential audit from the ATO. It's also important to be realistic and believe that the authority will never audit the "little guy." What are some of the strategies employed by the government to make sure that they are maximising their income, and what areas might you have overlooked?
Trick Algorithms
In this era of mass communication and electronic connection, it's not surprising to hear that the ATO is fully connected as well. Inspectors have access to a broad array of information linked to your personal identification number, provided by banks, building societies or other companies.
The tax authority has created some very clever algorithms. They are designed to work out what you should be paying (based on intelligence) and then compare it to the data which you provide on your form. If there is a big difference, those algorithms will raise a digital red flag, and you may get a letter from the taxman.
Interest and Income from Other Sources
This means that you should always declare interest or dividends appropriately, even if it is a hassle to do so or you think that it will not matter. You should also reveal income that you may receive from other sources, such as rental accommodation or car-sharing programs. The big companies that usually operate these schemes have been asked to provide granular information to the ATO. This is also fed into their prediction to compare with your actual form.
Joint Asset Ownership
You also need to be careful if you and your partner own an income-producing asset jointly. For example, you may own a rental property with your partner but may think you should leave it to the other person to declare any income. Even though they may be more actively involved with the project, you still need to express your interest on your tax return.
If you are too busy to keep accurate records and certainly do not know how to complete your end-of-year tax return correctly, you need a tax accountant. This individual will be familiar with all the inner workings of the tax authority and will make sure that you do not fall foul of algorithms and audits.
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