The Tax Office has been provided with extra money in the last three years, primarily to crack down on tax avoidance.  This year $670m is to be used to set up a new Tax Avoidance Taskforce, whose role is especially to ensure compliance.  Legitimate tax planning is not under attack, but it must be properly documented and executed.

These seem to be the major areas of concerns and attention, likely to be reviewed on the lodgement of 2016 Returns.

SMSF's

- Illegal early release of benefits

- Related party investments and loans

- Receiving income from trusts, and from salary sacrifice of Personal Services income

Trusts

- Review of trust deeds for rights of distribution of income and capital, and the streaming of dividends

- Resolutions for trust income distributions, which must be made before 30 June each year

Rental Properties

- Claiming interest on dual purpose loans with no apportionment (home + investment on one loan)

- Capital expenditure or renovations claimed as repairs

- 100% claims on holiday homes (no apportionment of costs for private use)

GST

- Developers not paying GST on new constructions

- Errors or deliberate understatement of GST owing

Data Matching

- Real property transactions are being checked back to 1985 (start of CGT)

- Motor vehicle transfers, sales and registrations (for GST, FBT and income tax) are being checked for the past 10 years

- Share transactions and transfers to or from foreign countries (for foreign income, undeclared income, tax evasion)

Employers

- Misuse of contractor agreements to avoid employer liabilities (awards, superannuation, FBT)

- Failure to pay superannuation guarantee

CGT

- Entitlement to access the small business concessions

- Misclassification of transactions as capital rather then income (esp. property developers)

- Undeclared gains (see Data Matching)

Cash Economy / High Risk Industries

- Focus on building contractors, cafés and restaurants and takeaway businesses, bakeries, car retailers.  (Ensure the tax return of your industry falls within the guidelines of ATO Benchmarks)

- Gold Coast businesses – at least 250 businesses to be visited, especially, cafés and takeaways, hair salons and nail bars (verifying income, paying cash wages with no accounting for them, not paying superannuation, state of record keeping).  If not satisfied, ATO intends to move on to a full audit.

Work Related Deductions

- Particular attention to car expenses, deductions for home office, telephone and IT claims (log book required).  The ATO says it will cross reference claims to its data analytics tools, to highlight large or unusual claims.

Actually, the list is not so different from past years, so the ATO no doubt is still finding significant errors and wrong returns (deliberate or otherwise).  The penalties and interest can be significant, so it pays to check everything carefully and get good advice.