Reporting and lodging

For SMEs, the ATO says it wants to make reporting and lodging easier by using “natural business systems”. The ATO says it sees failure to report income and over-claiming of concessions across the small-to-medium part of the spectrum. This ranges from small businesses attempting to hide income and operate in the hidden or cash economy, to companies inappropriately seeking CGT concessions available to business. It says it will use data-matching to identify non-compliance. Claims for fuel tax credits will also be closely monitored.

The ATO said it is also developing an online personal services income tool that will make it easier for contractors and consultants to correctly complete their tax returns.

The ATO will continue to use the small business benchmarks it has developed to help SMEs compare their performance against similar businesses in their industry. The ATO uses these to identify businesses that may not be reporting some or all of their income.

GST

GST registration is another area where the ATO is active. The ATO says it routinely reviews individuals and businesses registered for GST and cancel their registration if they are not carrying on a business and are not entitled to be registered.

Also, the ATO says it continually finds enterprises that fail to meet their GST obligations for real property transactions. The ATO sees incorrect reporting of sales, acquisitions and input tax credits, and failure to lodge BASs. The ATO will also continue to focus on property developers who deliberately disengage from the tax system at the point of sale.

SMSFs

Self-managed super funds are also a key target area for the ATO. Key issues here include: SMSF annual lodgment; contraventions reported by approved SMSF auditors; compliance of approved SMSF auditors; intermediaries who seek to exploit vulnerabilities in the system to facilitate fraud, including illegal early release of super.

The ATO will investigate employers when employees notify it that they may not have received their full Super Guarantee entitlements. Additionally, the ATO will check that employers are meeting their SG obligations when undertaking PAYG compliance reviews.

Cash

In the cash and hidden economy, the ATO is focusing on operators in the building and construction industry, and the restaurant, cafe and takeaway industry that it says are not operating fairly.

Employee v contractor issues continue to be of concern. The ATO says it is still seeing situations where employers incorrectly treat workers as contractors rather than employees.

FBT 

Regarding FBT, the ATO uses third-party information to identify employers that may have an FBT obligation, such as car fringe benefits, but are not in the FBT system. The ATO says it has found that in many cases, employers have simply failed to recognise and correctly report their FBT obligations. The ATO will work with these employers to remedy the situation. However, it notes that firm action will be taken where employers have deliberately sought to avoid their obligations.

Superannuation guarantee rates have increased. The ATO says it will be monitoring employers to ensure they are paying the correct amounts of super into their employees’ funds. Where appropriate, the ATO will use the director penalty regime to make directors personally liable for their company’s outstanding super guarantee charge liabilities.

The above is not an exhaustive list, but clearly indicates areas the ATO will closely examine. The Building confidence webpage on the ATO website should become a useful resource for SMEs to monitor potential tax risk areas that may affect them. It also contains details of a new small business newsroom the ATO has established and of help the ATO can offer SMEs, including after hours.