The taxation system in Australia is based on self assessment, meaning that the Australian Taxation Office (ATO) will accept a tax return lodged by a taxpayer, and will assess the tax liability, usually without adjustment.
While most Australians do the right thing, a small percentage choose to break the law by being deliberately dishonest which allows them to avoid paying their fair share of tax.
The ATO are committed to dealing with tax crime and want the community to have confidence in the tax system and the way it is maintained. As such, they have a number of measures in place to identify fraudulent activity…and deter it, including:
Tax refund checks: by way of specialist technology, these checks can take place before or after a refund has been issued.
Data matching: with banks and financial institutions as well as various Government agencies which helps to identify sales and purchases of houses, cars, boats and other items which may indicate a person has not declared all of their income.
Small business benchmarks: where financial ratios of similar businesses are applied to business financial figures to help identify if a business is reporting all of its income.
Reviews and audits: which are designed to maintain compliance and address the risk of non-compliance.
Using a registered tax agent is a good precaution against inadvertently lodging an incorrect income tax return, with the level of experience they have there are many questions they can ask that you may not have thought of, but ultimately you are still legally responsible for the accuracy of the information on your tax return – so please be careful.