Each year the Australian Taxation office targets key sectors of Australian business for audit campaigns – in its Compliance in Focus 2013 notice, small businesses are among those to have drawn the short straw.
The Compliance in Focus program exists to inform the community of key risks and issues in Australia’s tax and superannuation systems and how the ATO will address them.
“We know most Australians do the right thing and our focus is on helping people comply,” Second Commissioner Bruce Quigley said. “However, we take firm action against people who cheat the system. Compliance in focus sets out what’s attracting our attention and how we intend to deal with it,” Quigley added.
As a result the ATO will be undertaking a greater number of risk reviews and audits than ever before this year.
“Each year we improve our systems and expand the range of data and information we can match against claims. This year we expect to match over 640 million transactions,” Quigley said, adding that the data matching program helps uncover people who understate or omit income.
Compliance in focus highlights:
Small business (generally with annual turnovers of less than $2 million)
The ATO has concerns that some small businesses:
- Over-claim concessions
- Attempt to hide income and operate in the cash economy, and
- Claim capital gains tax concessions they are not entitled to.
Last financial year, the ATO completed 931 income tax reviews and audits in the small and medium business market raising $696 million in liabilities.
Super guarantee
The ATO investigate every instance of an employee reporting that their employer has not paid their superannuation guarantee entitlement.
In the coming year the ATO expects to contact around 19,500 employers as a result of complaints. Employers in the following industries will be targeted for super audits.
- cafes and restaurants
- carpentry services, and
- real estate services.
Employers may be held accountable for their company’s unpaid superannuation guarantee debt under the new director penalty regime.
Last financial year, some $275 million of employer super contributions were transferred to member accounts following enforceable compliance action.
Reporting of PAYG withholding
- 7,700 businesses will be reviewed to ensure employer obligations are being met.
Contractor arrangements
- The ATO will investigate employers who intentionally try to avoid their tax and super obligations by improperly treating workers as contractors rather than employees. Some 950 reviews of employers will be undertaken by the ATO.
Activity statement refunds
- 41,000 activity statement refunds will be reviewed to ensure businesses are correctly reporting their GST transactions and to identify instances of fraud. GST compliance work including reviews and audits in the small and medium business market raised $587 million in GST liabilities last year.