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More Australians than ever are claiming deductions they are not entitled to, and now the ATO has a new report to prove it.

The ATO Individuals (Non-business) Tax Gap report released today has highlighted a gap not just in tax collected, but also tax policies and community behaviours.

Michael Croker, Tax Leader at Chartered Accountants Australia and New Zealand, said the report is a tough warning to the millions of Australians now completing their 2018 tax returns.

“Many Australians probably think claiming a few extra deductions is a victimless crime, but it actually costs our society billions,” said Croker.

“This is not “their” money, it’s Australia’s money, and each incorrect claim adds up to billions being diverted from Australian services and infrastructure.

“Those who do not accurately share their claims with their accountant or the tax office need to consider that the ATO has considerable powers to investigate, claim money back and penalise.

“If deductions continue to be over-claimed, then the next step will be for policy-makers to consider new approaches, and this report certainly gives the argument credence.

“A standard deduction amount has been mooted before, and would make this type of behaviour next to impossible for employees, while relieving considerable administrative burdens.”

The Black Economy Taskforce’s Final Report and initiatives announced in the 2018 Federal Budget will help address undisclosed income.

“Expanded reporting of payments and enhanced use of new technology are the key tools to reduce this aspect of the gap,” said Croker.

“In this day and age where you can pay your bills on a watch, it’s getting harder to defend the use of cash which is more prone to use for, and by people conducting, illegal activities.”

The report today comes off the back of an important Tax Time 2018 campaign to change attitudes about personal deductions, and not just community attitudes.

“The ATO says a small, isolated group of tax agents are knowingly or carelessly facilitating false deduction claims to attract or retain their market share.

“This includes agents that do not question the costs clients say they have incurred, without exercising professional judgment.

“At Chartered Accountants Australia and New Zealand, members commit to ethical standards, agree to practice reviews and, if called upon, front a disciplinary tribunal empowered to strip them of their professional designation.

“Our pre-Budget submission urged a post-implementation review of the current regulatory framework for tax agents.

“The Tax Practitioners Board needs to deal with the ATO’s “agents of concern” fairly and quickly.

“Stronger collaboration between the ATO, the Tax Practitioners Board and professional associations is essential.