The Australian Taxation Office (ATO) has specifically identified IT managers, plumbers and defence force non-commissioned officers as the occupation groups that it will closely watch for further tax scrutiny.
The review seeks to uncover irregularities which could lead to an audit or a second look at the tax returns of Australians who belong to the above occupations. Red flags for the ATO are people whose claims rose significantly in the past few years.
The ATO may require taxpayers whose returns are being questioned to complete work-related expense information sheets when filing their returns.
As of Monday, July 23, the ATO has received more than 1.7 million tax returns and it has issued 653,000 refunds totaling $1.45 billion or an average refund of $2,222.52. ATO told Australian taxpayers that it targets to process 94 per cent of returns within 12 business days from submission.
However, thousands of taxpayers may be hit by backdated tax laws in the ATO's bid to apply the new rules to protect $1.9 billion in federal revenue. The possibility looms as the ATO plans to enforce the transfer-pricing bill which could be in violation of regulations due to lack of consultation on the reform.
Transfer pricing permits companies to move money between jurisdictions to reduce their liabilities and avoid paying tax twice on the same amount for firms where there are treaties between Australia and the host nation.
The lower house passed the bill in June. If approved into law, about 12,000 Australians and local firms which use cross-border transfers of at least $1 million would be affected.
Peter Collins, partner at PricewaterhouseCoopers, lamented that at the start of the consultation process for the bill, businesses were informed the law would be retroactive by eight years and the time frame was non-negotiable.
"The introduction of this bill will retrospectively change the law to create a new taxing power that operates from 2004. This is contrary to the rule of law," The Australian quoted GE Vice President Ardele Blignault.
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