The ATO says that last year 8.4 million taxpayers claimed a total of $21.3 billion in work-related expenses (WREs). This amount continues to grow.
Furthermore, the ATO says that it knows this is an area where taxpayers make mistakes, given that complex rules and individual circumstances make WRE entitlements difficult to understand.
While the amounts at an individual level are relatively small, collectively the overall impact is significant.
Improvements in data analytics and modelling allow it to create a risk profile for tax practitioners’ practices based on a comparison of their clients’ WRE claims with those made by similar taxpayers.
Over the next few months, the ATO will share these risk profiles with some tax professionals where their clients’ claims appear higher than expected.
It recognises that larger than usual claims may be legitimate due to the individualised nature of deductions.
By trialling the sharing of risk profiles, the ATO will increase its understanding of practices and gain feedback on the usefulness and accuracy of the risk profile so it can continue to improve it.
The ATO has developed work-related expenses (WREs) risk profiles to help identify how tax practitioners’ clients’ deduction amounts compare to similar taxpayers.