In a note to tax professionals, the ATO revealed that it “will begin more … visits around the country soon” as part of its Protecting Honest Business campaign.
“While we know not every business is doing the wrong thing, we found over 60 per cent of the businesses we visited so far need to take some kind of corrective action,” it said.
“There are businesses that operate in the cash and hidden economy, gaining an unfair advantage over those who declare their income and do the right thing. We aim to protect honest business from this unfair competition.”
Elaborating on the statement, assistant commissioner Matthew Bambrick told My Business that more than 2,600 businesses were targeted during 2017, with follow ups on those still ongoing.
During the last 12 months, eight regions across Australia were targeted: Perth CBD, Canberra, Cabramatta (NSW), Werribee (VIC), Sunnybank (QLD), Liverpool (NSW), Glen Waverley (VIC) and Glenelg (SA).
“Anecdotally, during these visits we have noticed that many businesses have a lack of record-keeping education and knowledge of appropriate processes,” Mr Bambrick said.
“Some businesses admitted to not recording all sales and just averaging or estimating sales information; many business owners sought recommendations for electronic payment facilities and showed significant interest in online tools and services; and a small number of businesses were identified without current ABN and GST registrations.”
As many as 60 per cent of businesses investigated have been found to have effectively hidden profits from the ATO, which Mr Bambrick suggested has resulted in a substantial underpayment of taxes.
“In the first six months of 2017-2018, we have conducted 5,020 reviews and audits resulting in approximately $143 million in tax and penalties,” he said.
Although specific geographic areas for visits to be undertaken this year were not revealed, the ATO said its focus will be on areas its data matching suggests have many businesses that don’t accept electronic payments.
“We are planning a similar level of specific location visits in 2018 in a range of suburbs and regions across the country,” said Mr Bambrick.
The ATO suggested business owners look at the following points to ensure adequate tax is being paid:
- Are you depositing all cash payments into their business bank account? “During our visits, many businesses didn’t have a dedicated bank account, used cash boxes or held business takings in their own wallets,” the ATO said.
- Do you have evidence to support all your income, expenses and lifestyle?
- Can you account for any stock used for private purposes?
- Use the small business benchmarks to calculate how their business is performing compared to similar businesses in the same industry.