ATO Compliance – Back on the Agenda
During the height of COVID-19 and its dramatic impact on everyone and everything, including the business community, the ATO particularly relaxed its compliance and auditing activities to give businesses a chance to “weather the storm”.
Now that things are slowly getting back on track, it has been made clear that ensuring compliance, and more specifically targeting non-compliance, across a range of taxation areas, is very much back in the spotlight.
Specifically, the budget has provided funding for a number of ATO programs targeted at taxation compliance.
• Personal Income Taxation Compliance Program – focusing on areas such as over claiming of deductions and incorrect reporting of income.
• Shadow Economy Compliance Program – targeted at shadow economy activities such as cash transactions that take place outside the tax and regulatory system, protecting revenue and level the playing field for those businesses that are following the rules through the expansion and improvement of the taxable payments reporting system.
• Tax Avoidance Taskforce – this is the largest allocation of the Government’s funding in relation to targeting tax compliance and so you can expect to see a lot of activity in this area.
Funding of the Tax Avoidance Taskforce will support the ATO to target the priority areas of observed business tax risks, together with its ongoing focus on multinational enterprises and large public and private businesses.
As a result we expect to see increased scrutiny in relation to areas such as:
• Allocation of proceeds of sale as capital versus revenue
• Administration of, and details surrounding Capital Gains Tax (CGT) disposals and claiming of small business CGT concessions
• Division 7A loans
• Trust distributions including those under section 100A
• Related party transactions
As is always good business practice, it is important to seek professional advice to ensure ongoing tax compliance in your business. If you are doing the right thing, you should have nothing to worry about if the ATO decides to look into your business a little further.
You should also be sure to always keep good business records and maintain all supporting documentation in regards to business transactions, so that you can readily provide substantiating evidence to the ATO should it be requested.
Extension of Small Business Debt Helpline and NewAccess for Small Business Owners Programs
$15.1 million (over 2 calendar years from 1 January 2023 to 31 December 2024) has been committed to extend the Small Business Debt Helpline and NewAccess for Small Business Owners programs.
The provision of these programs provides much needed mental health coaching and financial counselling for small business owners free of charge. They are a valuable service for business and business owners who are in need of additional support and guidance in these challenging times.