As part of the Tax Office Compliance Program for 2008-09 they will expand coverage with a more focused cash economy strategy.
Data matching is increasingly being used to detect unreported income, along with checking for inconsistencies between household and personal assets and reported income levels.
Micro enterprises attempting to avoid their tax obligations are brought to account so they do not have an unfair advantage over those who do the right thing. While data-matching from third party sources continues to be a part of this process, the ATO uses profiling to identify potential tax risks; especially businesses operating outside industry or economic norms.
Earlier this year the ATO started publishing benchmarks that businesses in cash economy industries can use as a guide (you can be sure the Tax Office will be!). In our upcoming Quarterly Newsletter, I’ll be providing a case study on how these benchmarks were used during an ATO audit…. needless to say it did not go well for the taxpayer taking regular cashies.
No matter how honest the person, taxpayers working in these industries (labourers, tradespeople, etc) tend to draw attention to themsmelves by failing to keep on top of the books/paperwork. It’s understandable; you’ve worked hard all day and the last thing you want to do is come home and do bookkeeping all night. From a Tax Office perspective, however, poor record-keeping is often a symptom of poor compliance with tax and other obligations. If you have consistently been late with Activity Statements, tax returns or paying your tax liabilities, you are a potential risk.
Something to think about
- The Tax Office wrote to, phoned or visited more than 68,000 businesses during the year to check for non-compliant cash economy behaviour. These compliance activities established more that $100 million in total liabilities.
- The Tax Evasion Hotline (1800 060 062) received more than 30,500 reports from people in the community willing to ‘dob’ about suspected failures to meet tax obligations.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
Christie has written 799 awesome articles for us at Alan Lewis Accountants – BLOG
Twitter: @christielewis
