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ATO developing software to stop tax avoidance

The ATO is in the midst of developing advanced data programs to find individuals who are leaving a source of income out of their tax return. Analytical tools have been developed to utilise the amount of data the ATO receives to identify instances where income has gone unreported. This is to address the annual $1.4 billion tax shortfall caused by individuals who leave income out of their return.

The ATO has identified that the most common mistakes are made by taxpayers leaving out cash wages. There are also issues with the non-disclosure of income from second jobs, capital gains on cryptocurrency, the sharing economy, the gig economy and foreign-sourced income.

Concerning foreign sourced income, the ATO has identified that most funds come from the UK, USA, China, Switzerland, Hong Kong, New Zealand and Singapore. In response to this, the ATO is developing a single global standard for collection, reporting and exchange of financial account information on foreign tax residents.

The ATO imposes penalties and interest for a failure to disclose an accurate statement of income tax. The penalties can range from 25 per cent up to 75 per cent of the shortfall, in addition to paying the money owed.

Posted on 27 September '18 by , under Tax.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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