ATO probing 30 years of real estate deals

I think it's entirely reasonable to have people go to a bin to dispose of rubbish. Besides, a little exercise never hurt anyone.

* (I assume 10mins is a gross exaggeration)

 

I always thought having a bin at every desk was tremendously stupid, like having a garbage bin in every room of your house. I used to remove it but it would end up there again. Removed the flouro lights also but the maintenance guy would occasionally put them back. Endless back and forth.

Anyway, I don't have a lot of faith in the ATO catching many tax evaders. There are some really simple things they could do but they don't seem to bother.

 

Like random inspection of people's & trader's receipts as they walk out after a transaction. No tax invoice, fine for both parties for not providing a tax receipt or invoice (cashie).

 

What about the "you only need to keep records for 5 years after the fact".

Say you had a CGT event 10 years ago which you declared, but since it was declared in a return over 5 years ago you have since shredded/destroyed the information and now you get a letter questioning your figures/calculations.

Surely there has to be some statute of limitation????? and they don't expect normal people to keep records forever

 

There is no "statute of limitation" for fraud or tax evasion which not declaring a capital gain event absolutely falls under.

I'd say you're very unlikely to get a letter if you declared it previously, the idea of this is to catch people who fraudulently did not include CGT events in their return not a fact check for precise calculations.

 

If you can prove no fraud was committed eg it was the recklessness or carelessness on a one off occasion I can't see how they can go back thirty bludy years lol. That is an abuse of power that even Benito wouldn't have done.

 

The ATO has a self reporting system for anyone who thinks they may have recklessly or carelessly omitted information from a return. Pretty much the only way for it to move from being fraud or evasion is to use that self reporting option and submit yourself to the mercy of the commissioner. It wont avoid the tax payable or the interest but it might take the penalties from being 75% to something more like 25%.

Either way, the ATO will get the money that you chose to omit from your return in the past if you take that option or they just issue the default assessment with the penalties attached.\

They can go back 30 years because tax fraud is a criminal offense with no statute of limitations, no different to things like murder or rape in that regard.

 

But what if it's not fraud? That's what I'm saying. Not every omission if income falls under the category of fraud.

For example not declaring your bank interest......"I forgot, I was ill, my records were swept away in that big flood and I had a lot of worries"........not fraud, not deliberate......have a look at the ATO Compliance Model.

 

In which case those people can easily self report that they've made an error and pay their tax. The ATO has made it clear that if you've omitted something then you should come clean about it, if you choose not to then it's fraudulent.

The ATO doesn't know whether your actions are fraudulent or by mistake but I personally like the approach of assuming that it is tax evasion and giving the taxpayer the position to prove otherwise because proving the legitimate side is very simple for the taxpayer.

They actually have exceptions for ill health and natural disasters in place that would allow that person to correct their tax return and pay the tax, generally without any penalties.

I have zero problems with this approach by the ATO, those who are doing the right thing will have zero issues from it, those who aren't wont enjoy it. It's kind of like speed cameras, yeah they're a revenue raiser but if you don't do anything wrong you will have zero issues with them, the ATO's job is to raise revenue.

 

I thought that the ATO could only go back 7 years for tax audits? Am I wrong?

 

If there is fraud then they can go back further. The operative word here is FRAUD . No fraud, no going back 30 years. I think the tax office is wasting it's limited resources here lol.

 

I am pretty sure that recently ATO also asked all records related to residential bonds from states, so if a landlord or REA has lodged the bond correctly but a landlord has not cleared rental income, ATO can catch them.

 

No, if there is fraud, there is no limit to how far back they can go (I think??). You keep receipts/records for 7yrs (or 5yrs now) BUT with IP's you need to keep receipts forever since CGT cost bases need to be calculated on sale etc.

 

But the problem with that is I'd be of the opinion I could dispose of records relating to a property I sold 7 or more years ago.

 

You clearly have no idea how many people intentionally leave out CGT events or rental properties then.

If the ATO does this in an efficient manner (which should be easy but it is the ATO...) then it should raise millions, quite possibly billions in revenue.

If you haven't committed fraud then you don't have any issues. The ATO is targeting those who didn't include CGT events or rental properties in their returns, they'll be very easy to identify for the most part.

They will probably do a quick capital proceeds/cost base reasonableness check on those returns lodged and as long as they're reasonable they'll move to the next one. This isn't a process aimed at making sure that you correctly calculated to the cent, it's about those who have haven't even reported the events.

Those who legitimately left it out of returns will have no problems either, if you left it out because it was a main residence it will be pretty easy to substantiate and prove. If you left it out because it was pre CGT, again, simple to prove (title search will do the trick).

This is a very good move by the ATO that will only impact those who've done the wrong thing. If you've reported the CGT event to a reasonable standard then you wont fall under this whole regime.

 

The ATO estimate puts it at 1 in 3 high wealth individuals being high risk, even at 1 in 20 this program would be fully justified. The ATO's aim is to capture an additional 1 billion a year moving forward, nevermind on all the back dated stuff that people thought they'd got away with.

You thinking they're wasting their time is great and all but you don't appear to have any actual basis from which you make the comment.

 

@wogitalia . I don't know where you are getting your figures from eg 1 in 3 high risk, but a link to your source would make your posts more credible.

Yes I think it's a waste of time based on other projects such as Project Wickenby. Remember that one? You don't hear much about that these days. It's all about public servants justifying their well paid jobs.

 

Wickenby was a huge success in terms of revenue raised and 'taxpayers' put in gaol. They recovered more than the cost, making a profit.

There was a press release in 2011 which said:
2 March 2011 One billion and counting: Wickenby reaches milestone
Tax Commissioner Michael D'Ascenzo announced Project Wickenby has reached a new milestone in its fight against tax crime, with one billion dollars in tax liabilities raised since 2006.

Project Wickenby | Australian Taxation Office

 

Project Wickenby was so successful for the ATO that they've brought it back as a full time ongoing program even though the original funding and project ended several years ago, which plays a pretty big part in why you haven't heard much from it in several years...

Just because you haven't heard of it doesn't mean that things weren't successful, those of us that work in tax deal with it on a day to day basis. Wickenby generated $2.3 billion in additional revenue that was undeclared prior to it, that was a $1.8 billion profit on the total cost of $500 million, that's a pretty successful program, imo.

Further to that, it was the success of Wickenby that has allowed the ATO to successfully get the topic of this thread and several other projects government approval going forward. The public declaration of incomes of the super rich is another direct result of Wickenby's success.