How to Get a Tax Audit

Discussion in 'Accounting & Tax' started by Paul@PAS, 3rd Feb, 2017.

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  1. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Run down property given some much needed TLC in stunning makeover - realestate.com.au

    1. Buy a property with intention to renovate and sell
    2. Do not occupy as your main residence (and admit publically it wasnt habitable)
    3. Substantially renovate ? Not in this case. No GST impact I suspect.
    4. Complete reno and dont reside in it for three months minimum
    5. Promptly list it to sell.... and the worst bit

    6. Brag in the media

    ATO waits a year or so. Please explain if you included any income from the sale of X ABC Street Suburbname in your 2017 tax return ?
    - ATO argues its ordinary income
    - No CGT
    - No Main Residence Exxemption (the interior pics may be a good defence !!)
    - Perhaps a crack at a GST issue

    Tip for PCers. Dont do media interviews. They can and will be held against you later - Your words can be twisted by a journo and be harmful. :(

    LOL - Just had a laugh. Spot the luxury inclusion in the before pics. Moet !!
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    @Paul@PFI - You forgot to add - take out Audit Shield.
     
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Audit insurances insure MY FEES against you getting audited and I get a healthy cut of the premium. You dont get a second opinion either. If I had to deal with this issue I dont see much of my time in it. Admit to a mistake and beg for mercy ?? Negotiate lower penalties ?

    It doesnt pay out for the taxes and penalties either ;)

    I dont recommend audit insurances due to the model. I wont go into details as I get attacked by firms that spruik it. The very marketing model is I must offer it to every client. I benefit from a client misfortune. Its like selling funeral benefits to sick people IMO
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Beautiful reno, but how do you know they will not be declaring their profits.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I dont . Its an example of what happens when you do media.
    I see some PCers in mags etc ATO read this stuff too. They have a team who has it as a job.
     
  6. MRO

    MRO Well-Known Member

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    So you are recommending I don't go on the channel 7 property flipper program?
     
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  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I agree, its not a good idea to go public with your privates.
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

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    Totally agree - I should have put a :rolleyes: next to it.

    Why would I want to pay insurance for the auditor's costs if I haven’t tried to hide anything?
     
  9. wylie

    wylie Moderator Staff Member

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    You don't have to have hid anything to find yourself having to defend yourself. If something flags you, your accountant is going to be involved and that costs money.
     
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    My Mother could not have said it better
     
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I saw it happen on ACA about 10 years ago. Couple in Sydney telling the world how they were making so much money from renovating and flipping properties. They'd done it several times already and it was all tax free because they lived in each property for a few months during the reno. They literally explained the process on TV.

    A couple of months later I read in the paper that they were on the nasty side of a tax audit.

    I really don't understand why people often publish their full portfolio and other financial details on this forum...
     
    Last edited: 6th Feb, 2017
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  12. Yson

    Yson Well-Known Member

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    publish is no harm if u are following the rules, e.g. paying tax propertly but guess if u are on a boarder line, then better keep it to urself
     
  13. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Rule one ; Close mouth. Never brag. There is always someone who will misinterpret or skew what is said. Someone who will want to take you down.

    I have a former client that did that TO HIMSELF...he embellished as some as prone to do. He went media and bragged about property he didnt actually have. ATO audit triggered a few months later (they showed me the media!!) and he admitted he had embellished matters. ATO checked for a bit before accept that excuse. They asked him to produce a copy of his credit history to verify borrowing history and ran a full search of land titles across the country before they gave up. I charged him for my time too which is why he left I suspect.
     
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  14. Tom Alaka

    Tom Alaka Well-Known Member

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    the first rule of fight club......
     
  15. datto

    datto Well-Known Member

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    One solution may be : Don't sell. Don't trigger taxes. Equity out and reinvest.
     
  16. SatayKing

    SatayKing Well-Known Member

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  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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  18. Mike A

    Mike A Well-Known Member

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    quite normal for the top rated schools.

    MBA Fees Australia
     
  19. Scott No Mates

    Scott No Mates Well-Known Member

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    Didn't you know that you must fly to Paris for the best foie gras, Bejing for Birds Nest and the US for a foot long hot dog as part of your research in the major project? :rolleyes:
     
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  20. Mike A

    Mike A Well-Known Member

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    Accommodation

    Paragraph 24 of TR 98/9 provides that accommodation expenses would not be deductable under section 8-1 of the ITAA 1997, where the accommodation constitutes the establishment of a new home. You have maintained a residence in Australia with most of your belongings. You also intend to return to Australia. The purpose of the accommodation was to attend the university and was only maintained during the academic year. Therefore expenditure on accommodation is an allowable deduction under section 8-1 of the ITAA 1997 as you have not established a new home in Country A.

    Airfares

    Paragraph 111 of TR 98/9 further provides that airfares incurred on overseas study tours or sabbatical, on work related conferences or seminars or attending an educational institution are deductible under section 8-1 of the ITAA 1997. They are considered part of the necessary costs of participating in the tour or attending the conference or seminar or the educational institution.
     
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