Recent statistics show that small business is responsible for 12.5% ($11.1 billion) of the total estimated ‘tax gap’. The ATOs consensus on this is that while Australia’s small business community is doing well there are some small businesses that are making mistakes on their tax, which is contributing to this shortfall.
Many of these errors are unintentional and are easily fixed, to assist in resolving some of these problems the ATO will be increasing their visits to small businesses around the country to monitor their compliance.
The ATO have stated that there are 3 main problems creating this shortfall:
Businesses not declaring all income
Failing to account for the private use of business assets or funds
Not sufficiently understanding tax obligations
If the ATO do pay you a visit in the next few months, they are likely to have a look at your recent sales records, payroll records and superannuation payments. If they detect any red flags during their visit, they are likely to expand their investigation.
There are steps that you can take today, to ensure your business is ready, should you receive a visit from the ATO this year:
Ensure your tax reporting is up to date
Ensure there are systems in place to manage your business, and make sure those systems are set up correctly and that you can explain how they work
Ensure payroll records are up to date and accurate
Ensure you can explain (and provide evidence) that your invoicing or receipts system works correctly and is well maintained
Comments