Compliance Matters – ATO areas of focus

Small Business in the ATO’s sights

New analysis by the ATO has revealed the size of tax gaps across various sectors of Australia’s economy, and found that small businesses account for the lion’s share of unpaid or underpaid taxes.

Using the 2015–16 financial year as the foundation of its analysis, the ATO estimated that small businesses collectively had a tax gap — the difference between what was owed and what was actually paid — of 12.5 per cent or $11.1 billion.

By contrast, large corporations had an estimated tax gap of 4.4 per cent or $1.8 billion in the same year.

Data on individual tax gaps used the prior financial year (2014–15) as the base of analysis, meaning the results are not directly comparable. Nevertheless, they suggest that the tax gap for the small business sector is larger than even that of individuals, who collectively had an estimated tax shortfall of 6.4 per cent or $8.76 billion.

The ATO have provided the following breakdown of the shortfall in taxes owed including:

  • Income tax for individuals – $8.76 billion;
  • GST – $5.26 billion;
  • PAYG withholding by employers – $3.36 billion; and
  • Superannuation guarantee – $2.79 billion.

With the introduction of single touch payroll the Tax Office now has the data at its fingertips to police employers and ensure all withholdings and superannuation are paid and up to date.

The ATO is also undertaking random visits of retail businesses in areas of concern they have identified to ensure business owners are appropriately registered and complying with their obligations.

The ATO also continues to use its extensive powers to request information having recently requested from AirBNB its list of owners who are using its services.  Rental property owners will continue to be scrutinised to ensure deductions are appropriate especially holiday homes and that all relevant income has been declared.

We remind everyone of the need to ensure they have accurate and appropriate documentation to substantiate their claims.

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