If we are to believe what we read in the media, the sharing economy is still high on the Australian Taxation Office’s (ATO) radar. The rapidly evolving sharing economy, in the form of household names such as Uber and Airbnb, has the ATO concerned that these entities are not paying their fair share of tax – and so the net widens for more scrupulous data matching efforts. The ATO cautioned that it has more than 600 million pieces of third-party data to track activity and income so this will no doubt join one of the many areas on the ‘hit list’.
Media aside, what we have seen from our client claims statistics in the past 12 months is that full audits, including comprehensive risk reviews and High Wealth Individual (HWIs) reviews, increased by 34% in the number of lodged claims, and 98.8% in the total claim value. In regards to HWIs we have seen the effect of the ATO’s change in focus regarding how it now deals with HWIs and privately owned wealthy groups. The ATO are no longer issuing many private group structure questionnaires, but instead using the information that they have been able to gather through their own internal data matching means and then, where deemed appropriate, commencing a comprehensive risk review, many of which progress to a full audit.
In the last edition of the What’s Happening newsletter I referred to the VIC Land Tax campaign which was prevalent in the latter half of 2015 year. We are still seeing the flow-on effect of his contributing to the increase in claims. Interestingly, more than 60% of category types (for example BAS, Income Tax and WorkCover) exceeded, if not remained consistent, in relation to the number of claims lodged compared to the previous financial year.
Audit activity in relation to Payroll Tax has been steadily increasing across all states in Australia. However, NSW topped the list as the state with the most significant claim numbers and claim values. As the Australian Federal Government aim to increase audit activity funding by 55% over the next four years, growth in audit activity will continue as it remains a major source of revenue for the government.
Lastly, I would like to conclude the article with a salient figure – $1,000,000. This is how much we pay per month in professional fees to Australian and New Zealand accountants that have been incurred by their clients as a result of audit activity. This figure is based on an average monthly total, based on the data of more than 2500 accounting firms since July 2015.
Rod Spicer | General Manager of Claims and Underwriting
- Audit Shield claims activity across Australia Jul-Dec 2022 - 30 January 2023
- Predicted ATO audit activity trendsfor 2021 & 2022 - 17 August 2021
- Tax audit claim stats all accountants in Australia will want to know - 14 July 2021
