The Australian Taxation Office (ATO) is setting specific targets for the next twelve months, with the black economy and fake business deductions at the top of their list.
The Black Economy
The Black Economy Taskforce is turning its focus to frontline advisers such as accountants and lawyers, in an effort to stem the flow of cash transactions undertaken to evade paying tax.
The Taskforce is an independent inquiry, involving a partnership of 19 Commonwealth agencies and a private sector reference group. Its primary objective is looking at ways to make business fairer for everyone by targeting the black economy, (also known as the cash economy or shadow economy).
Recent media reports have quoted Taskforce members calling on for members of the professions to comply with the law. They claim some tax agents and accountants are not asking the hard questions such as “have you reported all your cash jobs and are you paying cash wages from unreported cash takings?”
Small Business In the Spotlight
ATO Commissioner Chris Jordan says more than $22 billion was claimed for work-related expenses in 2014-15 by individuals and small businesses. Of this total an estimated $2.5 billion were for dishonest claims. Although each amount over-claimed was relatively small, the total impact on the economy was similar to the $2.5 billion owed by big business in unpaid tax.
Mr Jordan warned that small business owners were in the sights of the ATO and would be closely scrutinised at tax time.
His message was clear; declare all your income, don’t claim a deduction when you didn’t spend the money, don’t claim a deduction for private expenses, and keep records to prove your claims.
The ATO has also announced it will be increasing attention on phoenix operators over the next twelve months (eg. where a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts).
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This information is provided to you by the Small Business Development Corporation (Dated: 4 August 2017)