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ATO calling workers over $172 billion unreported income

Lucy Dean
·2-min read
ATO Assistant Commissioner Peter Holt has issued a warning to contractors. Images: Getty.
ATO Assistant Commissioner Peter Holt has issued a warning to contractors. Images: Getty.

The Australian Tax Office (ATO) is contacting workers amid concerns $172 billion in contractor income hasn’t been properly declared.

Businesses that use contractors in the road freight, cleaning, courier, building and construction, information technology, security, investigation or surveillance services are required to tell the ATO of payments made to contractors.

It said that while more than 158,000 businesses have reported all contractor payments in the 2019-20 year, it is now using data from its Taxable Payments Reporting System (TPRS) to ensure all payments have also been declared by contractors.

“More than 158,000 businesses have now reported all payments made to contractors in the 2019–20 year to us. This data, combined with our sophisticated data and analytics capability, means our field of vision to detect unreported income is better than ever,” ATO Assistant Commissioner Peter Holt said.

“Where we discover a discrepancy, our first step is always to contact the taxpayer or their tax professional to check they have fully reported these payments in their tax return.”

The ATO said it is now using this data to “proactively contact” contractors to find out if they have forgotten to declare income reported through the TPRS.

It gave the example of a delivery truck driver, ‘John’, earning a $80,000 salary for his Monday to Friday job, in addition to contractor income of $40,000 for work done delivering garden supplies on the weekend.

However, the driver only reported the salary in his tax return, excluding the $40,000 in contractor payments.

“A few months later, the ATO received a Taxable Payment Annual Report from the courier company that contracted John, reporting the $40,000 in income. We cross-matched the TPRS data with John’s tax return and noticed there was no business income declared,” the ATO said.

“We then sent John a letter asking him about the discrepancy and reminding him that he will need to declare the income. John lodged an amendment and paid the difference in tax owed.”

What to do if you’ve forgotten income

Workers who have forgotten to declare, or who have under-declared income from contract work, have been urged to speak to a registered tax professional, or lodge an amendment request.

The ATO said failing to report income hurts the Australian economy and contributes to more than $6.7 billion in unpaid tax.

“Honest courier drivers do the right thing: they pay their rego, pay their road tolls, stick to the speed limit, and pay their taxes,” Holt said.

“It’s not fair that some dishonest drivers get to skip the ‘toll booth’ and get an advantage over their honest competitors.”

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Image: Yahoo Finance
Image: Yahoo Finance