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ATO monitors personal living expenses

In an ongoing effort to address the misuse and abuse of the tax and regulatory systems, the ATO has implemented a new tool to monitor what constitutes reasonable personal living expenses.

Information is requested by the tax office to identify unreported cash income when looking at household expenditure. An individual will be required to provide this information to work out if they need to make adjustments to their business and record-keeping practices as well as help the ATO identify if they should be selected for an audit.

In the event of an audit or when making an assessment in the course of examining an individual’s tax affairs, the ATO will employ a set of guidelines presented in the form of questionnaire worksheets. These worksheets will require taxpayers to provide certain details about the living expenses of their household.

Discrepancies in tax returns that have been discovered by individuals completing a personal living expenses worksheet can be adjusted through voluntary disclosure. Taxpayers that voluntarily inform the ATO of mistakes before an audit may be eligible for reduced penalties.

Posted on 6 May '19 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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