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The Sydney Morning Herald: Tax commissioner to zero in on ‘startling’ level of rorting by individuals

The $165 million Plutus tax scandal has “tarnished” the reputation of Australian Taxation Office, tax commissioner Chris Jordan has conceded, saying the wealth allegedly accumulated by members of the syndicate was “staggering”.
In a speech on Wednesday, Mr Jordan also zeroed in on the “startling” level of rorting by individuals among $22 billion of work expenses claimed in tax returns. He foreshadowed a boosted focus on compliance among individuals and small businesses and suggested their tax avoidance through deductions likely topped that of large corporations.
Mr Jordan said the Plutus revelations had brought the ATO’s integrity into question and ruined the career of former deputy commissioner Michael Cranston, who has been charged by the Australian Federal Police following his son’s alleged role in the scam.
“I understand only too well we have ground to make up. While we may have had some credits and credibility from the positive changes we have made in the last few years, we have lost a bit of ground with [Operation Elbrus] and our systems outages,” Mr Jordan said in an address to the National Press Club in Canberra.
“It is at the heart of what we do and that is why I said it has been an ugly process over recent times. It is unfortunate because we have been doing some good stuff.”
More than 10 people have been charged in relation to the alleged scam, which the Australian Federal Police have alleged was a conspiracy to divert tax owed to the ATO over the past year. The matter is now the subject of multiple investigations, including an ATO review.
Mr Jordan, tax chief since 2013 and recently re-appointed for another seven years, said the alleged involvement of Adam Cranston, the former deputy commissioner’s son, was “difficult to comprehend”.
“The charges against Michael Cranston too have been equally hard to believe and at the ATO we are dismayed at the events that have unfolded in this regard,” he said on Wednesday.
“The connection with and alleged actions because of his son have ruined his career and his reputation and have compromised our standings and raised questions about the integrity of others within the ATO. This is a precarious situation.”
He said the “tension” of the father-son relationship had been anticipated and safeguards had been put in place that would have successfully prevented Mr Cranston accessing protected files if he had tried.
AFP investigators taped phone calls in which Mr Cranston allegedly warned his son he “could be the subject of search warrants” and counselled him on how to avoid prosecution.

In his Wednesday address, Mr Jordan said approximately 6.3 million Australians claimed a $150 tax deduction for clothing expenses, totalling $1.8 billion. He questioned whether people knew they were not simply entitled to it.
“That would mean that almost half of the individual taxpayer population was required to wear a uniform – suits are not uniforms – or protective clothing or had some special requirements for things like sunglasses and hats and a variety of other things. Half the population.”
Mr Jordan said the “tax gap” – the difference between the tax that should be collected and the reality – was larger among individuals and small business than large corporations. The latter, he said, was probably $2.5 billion, meaning they are collecting approximately 95 per cent of what they should.
“I want to indicate to you this is well and truly in our sights and we will be lifting our education, our support, our attention, our scrutiny and our enforcement in this area.”
He said the level of rorting among individuals was so “startling” that the ATO had doubled the number of random audits.

ATO helps to work out work Work Related Expenses
Work Related Deductions
Claiming a deduction for car expenses

Vacant Land
Property Inspection
Borrowing Expenses

Holiday Rental Properties

Simplified Depreciation from 1/7/2013

Budget 2015
Budget brief 2015 written by Practising Tax

Budget 2015 – SMSF(written by Law Central)

ATO budget 2015 media release

Small business simplified depreciation – form changes

From the 2012–13 financial year, changes have been made to the simplified depreciation rules:

  • The small business instant asset write-off threshold has increased from $1,000 to $6,500.
  • Small businesses can claim an accelerated initial  deduction for motor vehicles acquired in 2012–13 and subsequent years.
  • The long-life small business pool and the general small business pool have been consolidated into a single pool to be written off at one rate.

As a result of these changes the small business entity simplified depreciation question in the company, trust and partnership tax returns and the business and professional items schedule for individuals has been updated.The image below shows the new layout for this question. The changes include adjustments to labels A and B and also the removal of the long-life pool label.

Do you need to lodge  a tax return?

Net medical expenses tax offset phase out

On 14 May 2013, the government announced in the 2013–14 Budget that it will phase out the net medical expenses tax offset.
From 1 July 2013, those taxpayers who received the offset in their 2012–13 income tax assessment will continue to be eligible for the offset for the 2013–14 income year if they have eligible out-of-pocket medical expenses above the relevant claim threshold. Similarly, those who receive the tax offset in their 2013–14 income tax assessment will continue to be eligible for the offset in 2014–15.
The changes mentioned above will not apply to all taxpayers – the offset will continue to be available for taxpayers with out-of-pocket medical expenses relating to disability aids, attendant care or aged care expenses until 1 July 2019.