The ramifications of Australia’s “cash economy” is a pebble in the ATO’s shoe that it is constantly looking to dislodge. As part of its ongoing campaign, the revenue agency has devised its own conclusions about what constitutes genuine “living expenses”. Reasonable living expenses and ATO ‘cash economy’ push-back. One of the tools that it has developed to achieve this is a set of guidelines looking at an average taxpayer’s household expenses. The ATO has made these guidelines available to the public to allow taxpayers to:
self-assess their potential for being selected for an auditwork out if they need to make adjustments to their expenditure and record keeping.
The ATO says its guide “explains the importance we place on examining taxpayers’ household expenditure when seeking to identify unreported cash income in the course of reviews or audits”.
There are two case study guides that the ATO has published: A “concise” sample (view it here) and a “comprehensive” sample (view this here). Scroll up to read the example taxpayer case studies these guides are based on.
The ATO has also provided sample worksheets for personal living expenses (see below to download). These have been developed from feedback from the wider taxpaying population, and detail the type of information the ATO looks for when examining average household expenditure. Of course the ATO says that in the course of an audit it may seek even more detail.
There is a sample “concise personal living expenses worksheet” (download a copy here), which shows an overview of household incomings and outgoings. There is also a “comprehensive personal living expenses worksheet” (here’s the link to download this), which provides a more in-depth analysis.
The ATO states that by comparing annual household funds and expenditure, taxpayers and their tax agents can assess if their declared income will be deemed enough to support their actual lifestyle.
# [ATO], [cash economy], [living expenses], [tax], [tax deductions], [tax return]
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