ATO Letter - Am I Being Audited?

MoonlapseVertigo on 28/04/2018 - 07:28

Hi Guys,
I received a letter in the mail from the ATO informing me my 'work related expenses' were higher than the average amount for individuals in a similar job
(5 times higher). I have until 10 May to correct any entries that were misleading or false and will avoid a penalty.

I work from my home office hence the high expenses compared to those who work in a traditional office environment.

Has anyone received this letter before and do you think I'm on the verge of an audit? Not worried about false expenses however the possible headache from the ATO is a concern.

Thanks

Financial

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Comments

  • altomic on 28/04/2018 - 07:31
    +3

    just provide the evidence (i.e. receipts) for the expenses you have claimed and you'll be fine.

    take copies before sending them in case they go askew in the post

    • Speckled Jim on 28/04/2018 - 18:00

      Also use Registered Post, claim it back next return.

      • echelon6 on 04/12/2018 - 11:09

        also claim extra cost for 'managing tax affairs' next return because f them for giving you trouble

        • Dont Care on 28/07/2019 - 10:33

          and these two silly responses demonstrate why people get audited.

  • [Deactivated] on 28/04/2018 - 07:40
    +1

    “ATO begins random audits to crack down on false workplace deduction claims”

    https://www.smartcompany.com.au/finance/tax/ato-begins-rando…

  • donbot on 28/04/2018 - 08:18
    +1

    Most likely is that firstly, they will contact your employer with a questionnaire about your work arrangements. Eg. Are you as employee liable for working expenses, reimbursements, etc.

    Once they have that information, they will be in touch with you knowing what your employer has said.

    Source: In my role I have received numerous confirmation type letters. I have also seen the 'your work related expenses seems high given individuals in a similar role' letters that guys at work have shown me asking what it is, before I receive the questionnaire from the ATO.

    So yeah, if your claims aren't legit, or not directly connected to your employment - I'd be making a voluntary disclosure to correct them as they'll flush you out via your employer.

  • Sage on 28/04/2018 - 08:56
    +1

    Yes, potentially.
    I believe there's a set number of months before they'll actually start it, they wait a while.
    Not really anything you can do about it. The letter is to lessen the workload for the ATO by getting people to correct their expenses on their own.

    If you don't want the headache, use a tax agent.

  • [Deactivated] on 28/04/2018 - 09:01

    I had a session with a financial guy before I opened my business. He told me about taxation benchmarks. Try not to stray too far from them or the tax man come nosing around.

  • spal on 28/04/2018 - 09:08
    +4

    You are flagged by data matching as a risk due to higher than usual level of work related expenses claim for those in your profession. You can be proactive and call the number on the letter and let them know that you work from home the expenses for which are paid by you, that you have receipts and do not receive any reimbursement. Ask them to place this note on their system. Before you are formally audited the investigator would check your information read up the notes and may decide that you are likely to be compliant and may not audit you after. Source, I had received a similar letter from them. I called them and explained that expenses were high due to self education expenses, for which I had obtained a private ruling. Nothing further was heard.

  • Gotchas on 28/04/2018 - 10:00
    +2

    How much did you claim compared to income?

  • foxmulder on 28/04/2018 - 10:24

    Remember some expenses are just not fully deducted in the first year. Some expenses may be personal related rather than work thus you need to adjust it.

    If you do busienss at home you may apply for sole trader abn and have your sales and expenses separated from your personal income.

    And last, due to such letter, if I'm you I will consult to an accountant.

  • HardQuiz on 28/04/2018 - 10:30
    +3

    I received an email from the ATO a couple of months back with similar wording.

    I scanned all receipts/invoices and sent a reply email with a brief explanation on every document and under which category I’m claiming the expense. Basically made it easier for them to see the logic of my tax deduction claims.

    Few weeks later received a reply saying all good.

  • chumlee on 28/04/2018 - 10:58

    So what extra are you claiming working from home that's 5 times more than industry?

    • MoonlapseVertigo on 30/04/2018 - 15:02

      I'm a business consultant specializing in financial reporting - I work from home 75% of the year and am client facing at various client offices (new clients every few weeks).

      My home is powered most of the year and that's all reflected in my self funded expenses for the office. All the usual expenses but as it's a majority of the working year, it's higher than most people who work from home 1 day a week etc

      I also claim lots of travel to clients from home and to other client offices from our head office - it's the nature of the job, self funded travel to workplaces that aren't my companies.

  • smuggler on 28/04/2018 - 11:16

    Have you claimed any one off deductions more than $300?

  • vinni9284 on 28/04/2018 - 11:21
    +2

    I have had this about 3 months ago.

    Call them immediately, get more details of what they need & provide them with all the evidence that they need.

    I wouldn't go online with this.

    If everything pans out then they will close the case and send you a letter stating that everything is OK.

    That's what happened to me.
    It seems like their computer systems does an audit with your Tax claim and if there are inconsistencies down their end, you will receive a letter to prove.

    After this was resolved for me, I have not heard from them so I would say that there are no further/deeper audits.

    Good luck.

    Cheers

    • buckster on 28/04/2018 - 17:49

      Yeah, that or you're more a statistical minority so you're targeted in particular for the audit since your details stand out more than others even if there is no inconsistency.

  • JimmyF on 28/04/2018 - 17:03
    +1

    I work from my home office

    and that doesn't mean everything is claimable, so be careful!

    Am I Being Audited?

    Well yes, if they still feel you're over what you should be!

  • hawkeye on 28/04/2018 - 17:35

    Just tell them you thought everyone wrote with Fulgor Nocturnus pens and you should be alright.

  • [Deactivated] on 28/04/2018 - 21:34
    +1

    If you're getting audited prepare the lube

  • T-man on 28/04/2018 - 22:25

    They wouldn’t audit if the amount they could get from you is less than the cost for labor and auditing works.

  • Danstar on 03/12/2018 - 09:56

    I got this letter too. My claims are legit, but my tax agent advised it would be easier to reduce my expenses to avoid getting audited as they would go back last 5 years and the cost in paying some money back vs. getting audited, paying back is better (for me, as it would be in the hundreds of dollars)

    Any one want to share their outcomes who got this letter ?

    • Telcius on 05/12/2018 - 14:10
      +1

      I've worked in public practice and seen dozens of them, process was to check the claims thoroughly and in most cases no action was required and we'd never hear about it again. If some of the claims are in a grey area we would recommend a voluntary amendment.

      In my experience the advice you received is very poor, I don't understand the rationale at all. Remove tax deductions to avoid the expense of an audit? By doing this you're not guaranteed you won't get audited and have paid extra tax.

      • Danstar on 06/12/2018 - 08:14

        Hmmm good point. I feel like I should just leave it as is and if I get audited so be it. But at the same time, I have seen a relative get audited and it stressed him out a lot even though he was 95% legit lol

        • Telcius on 10/12/2018 - 09:22

          I'd be more stressed about a tax agent advising you to amend to remove legitimate deductions from your return! The whole point of a tax agent is to get legitimate deductions into the tax return, otherwise you'd do it yourself as wage earner ITR's are very easy to self complete.

  • Topdog on 04/12/2018 - 16:41
    +2

    I got one of those emails last year, and just ignored it! Then out of the blue I got an email saying I needed to login to eGov, and said my audit was now closed when I did, nothing happened, i did nothing, and never heard from them again.

  • Telcius on 05/12/2018 - 13:58

    Have they asked you to provide any supporting documents or calculations? if not it's just a warning designed to scare people straight. Not to say it won't become an audit

  • directflight on 27/07/2019 - 18:32

    I track my deductibles as % of employment income. I also have a long term investment that gives me negative gearing effects.

    From time to time, I increase the expenses gradually and when nothing happens, I keep pushing the envelope. Rinse and repeat. But always had receipts or calculations / workings to justify the expenses.

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