Tax office says Australians underpay $8.7 billion a year

12 July 2018

Tax office says Australians underpay $8.7 billion a year

The Australian Tax Office (ATO) has estimated that Australians underpaid taxes by almost $9 billion in 2014–15.

The tax gap — the difference between the amount collected and the amount that should have been collected — rose to $8.7 billion for individual taxpayers over the 2014–15 financial year.

The ATO has called for taxpayers to take extra care when lodging their returns, and has said it will be paying close attention to tax returns this year.

Common mistakes taxpayers make include incorrectly claiming deductions and private expenses, and not reporting cash wages.

Deputy Commissioner Alison Lendon said taxpayers must pay more attention to the fine details, with 70% of randomly-selected tax returns having one or more errors.

“What we have seen is that most people make small, but avoidable, errors, so we will ramp up our assistance to help these people understand their obligations and get things right. But we are also asking people to take just a little extra care with what they claim, because all of those little amounts add up,” Ms Lendon said.

The ATO will be using data collected about these mistakes to help provide guidance and advice for the future.

While most taxpayers had simply made mistakes, Ms Lendon said there is a “smaller number of people are deliberately doing the wrong thing” who “can expect closer attention” from the ATO this year.

Prime Minister Malcolm Turnbull said that the Government is “in favour of lower taxes but — and this is a big but — paying taxes is compulsory.”

However, according to the ATO more than 93% of the approximately $137 billion collected from personal income tax was paid voluntarily, with ATO intervention required in only a small number of cases.