Data matching of visa holders
The ATO intends to data match information obtained from the Department of Immigration and Border Protection over the next 3 years to identify whether visa holders to Australia have complied with taxation and superannuation obligations. Such information will also be used to:
- Identify potential risks faced by visa holders, visa sponsors and migration agent populations (e.g. potential fraudulent schemes);
- Implement administrative strategies to assist such parties to correctly report and pay their taxes;
- Support compliance activities under Australia’s foreign investment rules; and
- Ensure compliance with registration, lodgement, correct reporting and payment of taxation and superannuation obligations.
The ATO also uses immigration records – especially information stated by people leaving and entering Australia - to determine their tax residency status or the reason for a trip. For example, this can be relevant if a trip is declared to be for holiday purposes but stated in a tax return to be for business with associated tax deductions being claimed.
Our Nexia Tax Divisions are pleased to assist with any enquiries on international tax, how visa holders should be taxed and deductions allowable for overseas travel.
Work-related expense claims: Substantiate if exceed reasonable limit
The ATO is focusing on tax deductions claimed by employees (i.e. includes company directors but not labour hire workers) for work related travel expenses (i.e. accommodation, meal and incidental expenses) incurred while travelling away from home overnight for work.
If tax deductions claimed are less than a reasonable amount determined by the ATO each year (i.e. $55.30 per day for 2018 and $97.40 per day for 2017), substantiation (i.e. written records of the expense) is not required – however, if the tax deduction claimed is more than the reasonable amount, the whole claim must be substantiated (not just the excess over the ATO’s reasonable amount).
Recently, there have been three Court cases where truck drivers (who incidentally used the same tax agent!) were unsuccessful with their claims for work-related travel expenses because the amount claimed exceeded the reasonable amount allowed by the Commissioner and the truck drivers did not keep receipts for their expenses.
Credit rating of taxpayers with outstanding tax debts may be affected
There is currently a proposal to allow the ATO to disclose certain outstanding business tax debts ($10,000 or more that is overdue for more than 90 days) to credit reporting agencies.
But under these proposals, such outstanding tax debts will not be subject to disclosure if taxpayers have made arrangements with the ATO to pay their tax debts or taxpayers have objected against their tax debt or applied to Courts for a review of an ATO decision.
The ATO believes that such a threat of disclosure (and potential negative effect on credit rating) will motivate taxpayers to engage more with the ATO and pay their debts sooner.
Although the ATO does not currently disclose information to credit reporting agencies, we would strongly encourage any business with current outstanding tax debts to engage with your Nexia contact to ensure outstanding tax debts are paid in a timely manner. We can assist a business in establishing a payment plan with the ATO to avoid or minimise penalties and late interest charges on outstanding tax debts, or alternatively your Nexia representative can arrange solutions to refinance and restructure your debts, in order to manage your cashflow.