Straight to content

Tax Office Compliance Program 2008/09 – what it means for individuals

Back to front page

The key compliance activities that the Tax Office will focus on for individuals include:

Capital gains from the sale of property, shares and other assets .

The Tax Office states that it will match information on asset transactions from state and territory title and revenue offices, securities exchanges and share registries, and reports from managed funds to ensure individuals are reporting their capital gains tax obligations correctly. It will also write to taxpayers who purchased investment properties, shares or units in a managed fund in the 2007/08 financial year to inform them of their capital gains tax obligations if they dispose of these assets. In addition, the Tax Office will focus on whether capital gains distributed to investors in managed funds have been correctly classified.

In terms of managed investment schemes, the Tax Office will check that schemes are implemented as described in their product rulings and identify schemes that have proceeded without product rulings. The Tax Office will increase its monitoring of aggressive new financial products and arrangements to ensure financial products (including tax exploitation schemes) comply with tax and superannuation laws. It encourages taxpayers who have participated in any aggressive tax planning schemes to come forward early and make full and voluntary disclosures so as to take advantage of the provisions that allow reductions in any penalties which may be imposed.

Claims and classifications for rental property owners

The Tax Office has said that it will focus on the following areas for rental property owners:

  • claims for body corporate fees where the fees are to cover the cost of capital improvements or capital repairs;
  • claims for capital works where the capital works exceed the construction expenditure;
  • incorrect claims for stamp duty deductions on the purchase of a property title, which has been classified as borrowing expenses;
  • incorrect classification of expenditure as repairs and maintenance instead of being capital costs;
  • incorrect completion of rental schedules; and
  • incorrect deductions for interest expenditure.

The Tax Office said that it will contact tax agents whose clients have unusual patterns of rental claims. It will write to new rental property owners advising the owners of how to report rental income and claim deductions. It will also write to taxpayers identified as being at risk of not complying with the tax laws, reminding them to ensure the accuracy of their tax returns.

Superannuation

The Commissioner has highlighted several superannuation-related compliance priorities for 2008/09. The Tax Office will this year focus on supporting the implementation of the introduction of the new First Home Saver Accounts (FHSAs) from 1 October 2008.

Key priorities include:

  • employee superannuation — the Tax Office said it received around 20,000 complaints in 2007/08 from employees in relation to their employers not paying the correct superannuation guarantee contributions or not offering a choice of superannuation fund. Tax Office analysis suggests that employers in hairdressing and beauty, engineering design and consulting, and building and industrial cleaning are at a higher risk of not meeting their superannuation obligations.

    The Tax Office said it plans to make available by the end of 2008/09 an online tool for employees to allow them to check whether they are eligible for a superannuation guarantee and if they have received the correct contribution for each quarter. Where contributions are not correct, employees can lodge a complaint online.
  • over-claiming deductions for superannuation contributions and excess contributions — the Tax Office will use its data matching processes to ensure the annual contribution caps have not been exceeded.
  • lost members — the Tax Office will review a further 200,000 lost accounts and follow up with the account owners by telephone.
  • early access to superannuation — the Tax Office will work closely with industry regulators to investigate superannuation funds that are accessed without authority.
  • First Home Saver Accounts (FHSAs) — the Tax Office said it will manage the introduction of FHSAs from 1 October 2008. Its focus will be on ensuring that people have the information and advice required to understand the eligibility requirements and consequences of saving with the product.
  • self-managed superannuation funds (SMSFs) — the Tax Office will continue to focus on regulatory issues associated with protecting retirement investments, such as loans, in-house assets, borrowings and non-arm's length transactions, as well as ensuring funds are meeting income tax compliance obligations. Active compliance activities will cover at least 10% of all new funds. The Tax Office will also monitor approved auditors to ensure they are fulfilling their roles.

Remuneration packages of senior executives and directors

The Tax Office will expand its compliance activities of senior executives and directors to include:

  • senior executives of private companies; and
  • resident senior executives of foreign-owned companies.

It will focus on remuneration packages and any failure to report equity benefit and cash or share bonuses. The Tax Office has stated that where compliance action with senior executives identifies significant issues that are relevant to other employees, it will extend its compliance work to the larger population.

Work-related expense claims

The Tax Office will review and audit activities, particularly in relation to nurses, medical practitioners and chefs. The Tax Office said it would also focus on ‘out of pattern’ claims for self-education, car and travel expenses.

Back to front page