Individuals: Going Electronic

We’ve been hearing it a lot in the media recently that ‘everything is going electronic’ and this includes your ‘old fashioned’ PAYG Payment Summary which will no longer be issued by your employer from next financial year (ending 30 June 2020) onwards, and instead, all payroll data will appear in your MyGov account.

With most of life going electronic, what does this mean for individuals from a tax perspective?

Already the ATO are cracking down on various Work-Related expense claims. Now, in your tax return, they are asking you to breakdown various Expenses into separate amounts, as a single lump sum of Work-Related Expenses will no longer be acceptable. You will have to separately list your Expense items, such as telephone, internet, training courses, memberships of professional organisations, laptops, stationery and so on.  Motor Vehicle expenses will also likely have to now show the separate components for fuel, maintenance, insurance, finance cost, and other information.

The ATO will then use this information and benchmark across people by industry and occupation, and then work out if a taxpayer’s level of deductions are above average or below average. This will help them to determine if they are going to do an audit or not.

The same also goes for Tax Agents – the ATO are putting us under more scrutiny to check whether or not we’re educating and advising clients in the right way, or whether we’re a risk to the tax collection process. Tax Agents are being compared across the country, and then the claims by our clients are matched against other tax agents’ clients, and then we are ranked accordingly.

It will, therefore, be more important now than ever before, to make sure that you have all of your receipts, log books and other justification for claims, to be able to survive an audit.

We prepare tax returns for our clients with the view that if the ATO walks through the door, will they stand up to the scrutiny of an ATO audit. We, therefore, educate clients on what they may or may not be able to claim, and what evidence is required.

With a lot of technology now available, we have been assisting individual clients who are not in business with their record keeping by providing free use of an App for collecting their information electronically. This is an offer from AAG only, and it isn’t available unless you are an AAG client.

• Dext for Individuals – Technology to make life simpler for your personal tax return
• Dext for Business – Technology to make life simpler for your business

The benefit of this technology is that you can collect your data and information as you’re going. This means that you don’t have to worry about collating a shoe box full of receipts at the end of the financial year, or trying to remember or recall what you had an expense claim on, or for. Instead, you can simply take a photo of the receipt on your smartphone or mobile device, or email it to a special email address, and make notes about the expense, and how it’s related to your:

• Work, including professional development, self-education, and general expenses;
• Investments, including margin loans, or research; and
• Rental Property or properties.

There are other Apps available for free, which include the ATO app. Our concern over the use of the ATO app is their ability to then access more of your information and claims. This is like playing poker and showing your hand to the dealer before you play!

The App that we provide free to our clients can be accessed from your smartphone, mobile device or a web browser. As it’s cloud-based, we are able to access this information at the end of the financial year, and that means that we can readily review it, and you don’t need to worry about spending hours at the end of the financial year to provide your receipts or collate data for us.

The App also collates information by date order. So, when you upload a receipt 6 months later that you’d previously forgotten about, the App will ensure that it’s included in the correct financial year.

We have been working to assist clients to not only make life simpler for collecting their data, but also being able to withstand an audit, and justify claims.

As the late Kerry Packer once said:

“I pay the tax I am required to pay, not a penny more, not a penny less. If anybody in this country doesn’t minimize their tax, they want their heads to read because, as a Government, I can tell you they’re not spending it that well that we should be donating extra.”