May 6, 2019 10:09 am
In an ongoing effort to address misuse and abuse of the tax and regulatory systems, the ATO has implemented a new tool to monitor what constitutes reasonable personal living expenses.
Information is requested by the tax office to identify unreported cash income when looking at household expenditure. An individual will be required to provide this information to work out if they need to make adjustments to their business and record-keeping practices as well as help the ATO identify if they should be selected for an audit.
In the event of an audit or when making an assessment in the course of examining an individual’s tax affairs, the ATO will employ a set of guidelines presented in the form of questionnaire worksheets. These worksheets will require taxpayers to provide certain details about the living expenses of their household.
There are two versions of the worksheet, both of which outline what the tax office looks at when examining personal living expenses. The worksheets can be used at any time by individuals to:
- Compare their household income to expenses and assess if their declared income is enough to support their lifestyle.
- Review their record keeping.
- Make adjustments to their reported income.
- Consider whether making a voluntary disclosure is necessary.
Discrepancies in tax returns that have been discovered by individuals completing a personal living expenses worksheet can be adjusted through voluntary disclosure. Taxpayers that voluntarily inform the ATO of mistakes before an audit may be eligible for reduced penalties.
Categorised in: tax