According to the Tax Office, risk messaging in the pre-fill report of over 700,000 clients of tax agents was provided, while over 140,000 taxpayers were contacted via letter or audit where their work-related expense claims were higher than expected when compared to their peers, resulting in over $43 million in liabilities in the 2017–18 financial year.
For self-preparers lodging through myTax, the ATO sent ‘nudge’ messages to approximately 230,000 taxpayers, about seven per cent of myTax users, resulting in adjustments estimated to have saved almost $24 million in government revenue.
Total individuals tax collections grew by $13.1 billion, up 6.8 per cent from the year before, and $2.4 billion above budget profile, reflecting stronger employment growth, according to the ATO.
The ATO’s public focus on work-related expenses culminated in the publishing of its individuals not in business tax gap report which found that such claims were a main component driving the $8.76 billion gap.
Speaking to Nest Egg sister publication Accountants Daily, CPA Australia head of policy, Paul Drum said the results would give impetus to the Tax Office to continue its focus on clamping down on work-related expenses.
“Work-related expenses is trending in the right way according to the ATO and people are being more circumspect and taking more care in what they are claiming as a result of their public campaign,” said Mr Drum.
“The ATO’s focus on it is going to remain and they are going to be vigilant because they are already seeing a dividend for the work they’ve done over the last couple of years to build up to the release of the tax gap report.”
However, Mr Drum believes the focus on work-related deductions will ultimately see the ATO turn towards a standard deduction concept as proposed by the Australia’s Future Tax System Review, and back by the House of Representatives standing committee on tax and revenue.
“Is it the death knell of work-related expenses? It is too early to call. I think there is a sense of inevitability that one day they might be reined in but given an election next year, I don’t think it’s going to be an issue for a little while,” said Mr Drum.