How the ATO is tackling the black economy with this living expenses questionnaire

The black economy, or also known as the cash or hidden economy is a significant economic issue that affects all of us. It refers to both dishonest and criminal activities that take place outside of, or involves misuse or abuse of the tax and regulatory systems. But whichever you want to call it, the ATO is committed to tackling the black economy and creating a level playing field for all. As part of that ongoing effort, the revenue agency has settled upon different sets of what constitutes reasonable “personal living expenses”.

One of the tools that the ATO may use when assessing a taxpayers tax affairs is a set of guidelines looking at an average taxpayer’s household expenses. These guidelines are presented in the form of questionnaire worksheets, where taxpayers are asked specific details about their household living expenses.

There are two worksheets; a concise one and a more in-depth extensive worksheet. Each one outlines what the ATO generally looks at when examining a taxpayer’s personal living expenses.

The ATO also says that practitioners can find the worksheets handy in helping clients review the accuracy and completeness of their record keeping. It says they can also be used at any time to:

• Compare a client’s household income to expenses and assess if their declared income is enough to support their actual lifestyle
• Review their record-keeping
• Make adjustments to their reported income
• Help in considerations of whether making a voluntary disclosure is necessary.

The concise personal living expenses worksheet reveals a snap-shot of the households incomings and outgoings. Significant outgoings only are deducted from income and the remaining amount needs to be enough to cover your other household expenses. Download the printable version here.

The extensive worksheet provides an in-depth analysis of all household incomings and outgoings. By comparing annual household funds and expenses you can self-assess whether your declared income is enough to support your actual lifestyle. Download the printable version here.

Let Wealthpreneur help you!

Wealthpreneur offers services to help educate you on the whole process and how you can play your part in keeping the system fair for everyone.
Below are some of the benefits of our services:

Prevention of Tax Audit

• Educate taxpayers about audit trigger points.
• Provide education with proper record keeping.
• Explain their right and responsibility as a taxpayer.
• Provide an option to take tax audit insurance.
• Alert with Tax Office targeted area of audit each year.
• Prepare client with proper record keeping. If tax audit comes it can be dealt with minimum time spent.

Manage Tax Audit

• Liaise with Tax Office.
• Provide education on the whole process.
• Explain their rights and responsibility with a tax audit.
• Advise solutions to eliminate or reduce penalties.
• Explain and recommend early disclosure of known breaches.
• Provide solutions for future changes and record keeping.
• Introduce experienced Tax Lawyers if needed to manage the whole audit process.

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