ATO audit on LO DOC NO DOC borrowers?

The Mortgage Manager I deal with was saying ATO is targeting LO DOC borrowers.

cheers,
Sanjiv Gupta

“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.” – Nelson Mandela

There is a risk of receiving an Audit if your low doc income declaration varies from your business income declared to the ATO.
The ATO has a computer system called AUSTRAC that cross checks the data so there is an element of risk that they may ask the bank for a copy of your income declaration information. By law your lender would have to provide this information if the ATO asked for it.
Also what year are you looking at as the ATO can go back several years after the event now or into the future.

You can read all about the audit on the ATO web site
http://www.ato.gov.au/corporate/content.asp?doc=/content/mr2004042.htm

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Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

You shouldn’t have anything to fear from the ato due to low doc loans unless you are actually avoiding tax some how.

I use low doc loans as a simple way to get around all the hoop jumping and paper work trails the banks generally make small business owner’s go through proving income.

It’s simply “look I have this equity and I want to borrow this amount for this property and yes I can pay you back”

obviously if you are hiding large sums of income from the tax office you may be introuble.

Tysonboss,

Its not that simple really. WIth Low Docs you still have to list an income. Often this is in the form of a statutory declaration. If this income is too low to pass the lenders serviceability model, then the loan will be declined. Therefore some people have been known to exagerate their income.

If you declare $50,000 in your tax return, but tell the bank you make $100,000 taxable income, then the ATO could get hold of this declaration and issue you with an amended notice of assessment to make you pay tax on the other $50,000. It would be up to you to prove you didn’t make this sort of money.
It is an offence to make a false statutory declaration.

That’s the theory anyway. I am not sure if this has ever happened to anyone, but know my accountant mates formerly of the ATO refuse to use Low Docs.

Terryw
Discover Home Loans
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