ATO Overworked And Underfunded, Says Report

by Mary Swire, Tax-News.com, Hong Kong

08 October 2001

According to internal reports from the Australian Tax Office, 42% of Australian taxpayers are over-claiming for work-related expenses, leading to a tax loss of more than $1.5 billion.

The internal documents paint a stark picture of the ATO's current situation; struggling to cope with GST related issues, and unable to stem the tax evasion tide in key areas such as capital gains tax fraud, fringe benefits declarations, and superannuation deductions. Estimates suggest that around 50% of taxpayers are not declaring capital gains on investment returns, but due to resource constraints, it is impossible for the tax authorities to conduct individual audits on all of those involved.

It was also revealed that although up to 21% of the value of all work-related claims made by Australian taxpayers may be exaggerated or false, funding cuts of 90% over the past three years mean that the department is dangerously overstretched. 'Large numbers of direct contacts with taxpayers are required to have an impact on total work-related expenses, which goes against current resource policy,' stated one document.

The papers also reveal that over half of superannuation deductions claims are false or incorrect, leading to a loss of some $60 million. However, the ATO has protested that the documents have been taken out of context by the media, and do not give the full picture in terms of compliance. 'Some of them are drafts prepared for various committees and some aren't final,' said ATO Personal Tax Deputy Commissioner Jenni Granger last week.

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