In a recent broadcast to tax agents the Tax Office put agents on notice that they have began matching income details from a range of low doc loans with the borrowers’ tax files. Of the 176 cases currently being reviewed, the Tax Office state that in approximately 70% of cases there has been an understatement of income in borrowers tax returns or no returns have been lodged.
A Low Doc Loan is a term used to describe a loan, which does not require paperwork to prove income. The interest charged on these loans is usually higher than that on normal loans.
If the Tax Office is successful in its prosecution of its current cases it intends to increase its resources dealing with this issue and to further expand its matching program. Tax Commissioner Michael Carmody warns that “People deliberately understating their income face penalties of up to 75% (of the tax avoided) plus interest.
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