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Dealing with the Tax Office should now be seen as a regular cost of doing business, one expert says.
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ATO funding to bring more taxpayers under real-time scrutiny
20 May 2024
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Taxpayers across the board should prepare to become more familiar with the Tax Office and have real-time interactions as a result of its $2.1 billion funding boost from the budget.
BDO tax partner Mark Molesworth said the ATO would use the funding to go after taxpayers more efficiently, with budget papers projecting $4.8 billion in receipts over the next five years.
“The Tax Office is attempting to become more real-time with this money – so they’re not reviewing necessarily what happened three or four years ago, they’re reviewing what happened last year,” he said.
“Or they’re saying, ‘We read in the newspapers that you're selling this, or we saw on TikTok you might be promoting a scheme to defraud the Commonwealth of GST. We want to talk to you right now.’”
The Tax Avoidance Taskforce received an additional $1.2 billion in funding to pursue high-wealth individuals, large businesses and multinationals and $160 million was allocated to the Shadow Economy Compliance Program.
The government extended the Personal Income Tax Compliance Program for another year from July 2027, allocating $180 million to crack down on issues such as incorrect income reporting and over-claimed deductions, including those from short-term rentals.
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The ATO also received $187 million to address tax and superannuation fraud, with $78.7 million to upgrade technology detecting scammers in real time, $83.5 million for a compliance taskforce and $24.8 million to improve fraud management.
This expansion of the ATO’s compliance programs would be bolstered by an extension of the BAS refund retention notification period and a 1,721 headcount boost up to 21,350.
Molesworth said this meant everyone – from individuals to SMEs to multinationals – should expect to receive more visits from the ATO and interactions in real-time.
“The key message is that the ATO is here to stay in your life,” he said. “Australian taxpayers should see dealing with the ATO as a regular cost of doing business here.”
But international investors would also face additional scrutiny, with rules introduced to broaden the types of assets that fall under the foreign resident CGT regime and increase receipts. Foreign residents selling shares for more than $20 million would also be required to notify the ATO in real-time.
“That will give the Tax Office a big river of data to see transactions happening in the economy in real time and turning their mind to how those transactions should be taxed very early on,” Molesworth said.
To prepare for the compliance crackdown, Molesworth said being able to produce correct records was essential when the Tax Office came knocking.
“Where taxpayers maintain the correct records and have good evidence available to them, then you can expect to prove your case,” he said.
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