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Income tax gap results

The ATO has released its latest findings on the tax gap for Australian individuals. The estimated gap in 2014-15 is approximately $8.7 billion or 6.4 per cent.

The income gap is an estimate of the difference between the tax the ATO collects and the amount that would have been collected if each taxpayer was fully complaint.

Over 93 per cent of income tax received from individuals not in business is paid voluntarily or with little intervention from the ATO. There are around 9.6 million individuals who are not in business and lodge tax returns. These taxpayers earn their income from salary and wages and investments.

The tax gap is primarily driven by incorrectly claimed work-related expenses. The ATO says the most common mistakes include:
– Claiming deductions where there is no connection to income
– Claims for private expenses
– No records to show that an expense was incurred.

Other areas of concern include high rates of incorrect claims for rental property expenses and non-reporting of cash wages.

The ATO is warning taxpayers to take care with that they claim, because all of those little amounts add up.

The Tax Office uses data and technology to identify outliers, as well as tailoring advice and guidance products, auto-correct mistakes, streamline reporting and substantiation processes, access third party data to verify claims and provide pre-fill information in tax returns.

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News

What to consider when consolidating your super

August 27, 2020

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds’ policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready: