Reasons To Get Red Flagged According To Tax Agent

According to a tax agent, there are various reasons that a tax return could get a red flag from the Australian Taxation Office. Therefore, it is recommended by tax agents to get a tax audit insurance in case they commit any unintentional mistakes during the filing process. These mistakes could delay the tax refunds or it could submit an individual or a business to penalty fees along with interest charges.

The ones who got caught in a situation with the tax agency are those who are filing to early because they are excited to get their tax refund. This is compared to those who wait for a month more to make sure all their information are correct.

Oftentimes, people forget to list things such as a part-time job they got because many months have already passed. There are also times when they got a hobby business on the side such as driving for Uber and they forget to write it down.

According to the ATO, the income tax gap concerning individual tax payers has reached almost three and half more compared to large businesses. On average, every Aussie is cheating the ATO with $906. The tax gap is the approximate amount calculated by the ATO which they are supposed to get yet they miss out on these because of dodgy claims of many tax payers.

From the year 2014 to 2015, there was a 6.4 per cent tax gap coming from individual tax payers alone which amounted to $8.7 billion. One of the major reasons for the tax gap is the mistake done on the claims which are expenses spent concerning their work. Looking at the tax gap of the large corporations, it was only 5.8 per cent or equivalent to $2.5 billion.

The ATO conducts random audits and this is their basis in calculating the tax gap through extrapolation of the total number of taxpayers. Red flags could be given if the entire income was not declared, if maximum amount of deductions are from receipt-less transactions, if the claim is considerably higher than co-workers, if the individual has an existing government debt, if the personal details were not updated and if the employer failed to submit the employees PAYG. Any of these mistakes can be committed and tax audit insurance will help cover individuals to protect them from unexpected charges.

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