Yahoo Finance Tax time: 2 million Aussies face ATO punishment
Aussies have been warned about being truthful on their tax returns.
Tax time is fast approaching and Aussies will be hoping to get as much out of their return as possible to help with the rising cost of living. But it appears some might try to push the envelope to get a bigger return.
New research from Finder has revealed around two million people have lied on their tax returns in the past. Sarah Megginson, personal finance expert at Finder, told Yahoo Finance it might be tempting to fudge the truth, but the Australian Taxation Office (ATO) can come down on you like a ton of bricks if you're caught.
“Even an unintentional error can have consequences. Don't risk a bigger problem by trying to cheat the system," she said.
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“If you're unsure about deductions or have a complicated situation, seek help from a tax professional. They can guide you through the process and ensure everything is filed accurately.”
Young Aussies were found to have lied the most, with 17 per cent of Gen Z and 15 per cent of Millennials admitting to being untruthful on their tax returns.
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That's three times higher than the older generations as only 5 per cent of Gen X and Baby Boomers confessed they'd lied in the past.
When it came to the type of lies being made on tax returns, 5 per cent of respondents said they made more deductions than they should have, while 3 per cent didn't report overseas income and 2 per cent didn't report capital gains or cryptocurrency wins.
Megginson said it was important to make sure your tax return was accurate.
“Filing taxes can feel like navigating a maze, with many unsure what deductions qualify and how to report financial gains and losses," she explained to Yahoo Finance.
What are the penalties for lying on your tax return?
The ATO can inflict penalties on you if you make a false or misleading statement on your tax return.
In a shortfall scenario, you can be charged 25 per cent of the shortfall amount for failing to take reasonable care when submitting your return. You'll be fined 50 per cent of the amount for reckless behaviour and 75 per cent for intentionally disregarding the tax law.
The shortfall amount is the difference between your correct tax liability or credit entitlement, and the liability or entitlement you provided on your return.
If it's not a shortfall scenario, then the fine is based on penalty points, which is $330 per point. Failing to take reasonable care is 20 points, or $6,600. Recklessness attracts 40 points, or a $13,200 fine, and intentional disregard will set you back 60 points, or $19,800.
“Lodging inaccurate information with the tax office is a criminal offence which can, in extreme cases, call for up to 10 years’ imprisonment or hefty fines,” Finder said.
“While most people aren’t intentionally dishonest when submitting their return, it’s important to be diligent in double-checking you’re not making a costly mistake.
“The risks and consequences far outweigh any short-term gains made.”
Plenty of Aussies will be desperate for their tax return this year
Finder's research has laid bare how keen Aussies will be on getting their tax return during a cost-of-living crisis.
Nearly half of Aussies expect to receive a tax refund this year, and of those, a worrying one in 10 people admitted their refund would be “critical” to their financial wellbeing.
Around a quarter of people surveyed said their tax refund was “very important” to their finances, while a further 43 per cent said it would be “somewhat important”.
Women are feeling the pinch the most, with 42 per cent admitting they were relying on their tax refund, compared to 28 per cent of men.
Around 11 per cent of Aussies said they were expecting a tax bill, instead of a refund, this year.
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