The ATO has provided more details on its upcoming site visits to businesses in a number of Australian regions, which this time will also look at the advice these businesses are given by their accountant or tax agent.
Earlier this month, the Tax Office said that it had been “really pleased” with the level of compliance it found among, and level of engagement from, Tasmanian businesses during its visits to Launceston and Smithton as part of a nationwide crackdown on the black economy, combined with an educational tour aimed at supporting SMEs understand their often complex tax obligations.
The ATO also revealed that its next visits would be targeting areas in Victoria, Queensland and the Northern Territory.
“We will be visiting the Richmond area (Victoria), the Maroochydore area (Queensland), Batchelor, Bees Creek and Adelaide River areas (Northern Territory), [and] Katherine and Pine Creek areas (Northern Territory) in May 2019,” a spokesperson had said at the time.
Those visits will be taking place over the next week, the ATO has since confirmed, with investigators set to go doorknocking “up to 1,800” businesses operating within different industries depending on their location.
“We will be visiting up to 1,800 small businesses across all three locations as part of these visits, where our data has identified a higher risk,” a spokesperson told My Business.
“Local visits and interactions provide an opportunity for us to assess businesses, as part of our work to protect honest businesses from unfair competition by addressing black economy activities.
“If businesses are genuinely trying to do the right thing, we will provide them with one-on-one education about the tools and information they need to correctly register, lodge on time, maintain accurate business records, and correct any mistakes. However, if we think a business is deliberately doing the wrong thing, we have an obligation to the community to investigate further and take the appropriate action through audit activity.”
The spokesperson did not explain whether particular businesses have been earmarked for inspection.
In Maroochydore, site visits will focus on cafes, restaurants and takeaway food outlets; building, pest control, agricultural and gardening services; personal care services; legal and accounting services.
“We are particularly concerned about businesses in Maroochydore who are not registered for pay as you go (PAYG) withholding or GST,” said ATO assistant commissioner Peter Holt.
“Local visits provide us an opportunity to talk to business owners and help them get things right.
“We also encourage the community to share their concerns and help ensure local businesses are competing on a level playing field. Signs that a business may be operating in the black economy include poor record keeping or not providing receipts.”
Previous site visits by ATO inspectors in the state have targeted Broadbeach, Cairns, Caloundra and Sunnybank.
Northern Territory visits
Across the border in the Northern Territory, a more general approach is being taken, looking at any type of business that may be using cash-in-hand to ensure that reporting is accurate.
Again, a lack of registration for PAYG withholding or GST are the major red flags inspectors will be seeking to look into.
“Businesses who pay cash in hand, or fail to lodge income tax returns or business activity statements get an unfair advantage and make it harder for other businesses who are doing the right thing,” said Mr Holt.
“By detecting and addressing this behaviour, we’re helping to ensure a level playing field for honest small businesses in the NT.”
In Victoria, separate industries are being targeted across the two different locations, but both locations were chosen due to low levels of PAYG withholding and GST registrations.
As many as 700 Dandenong businesses can expect a visit from inspectors if they operate within the sectors of building, pest control and gardening services; transport support services; automotive repair and maintenance; postal and courier pick-up and delivery services.
Meanwhile in Richmond, up to 500 businesses are being targeted in architectural, engineering and technical services; other personal services; computer system design and related services; as well as cafes, restaurants and takeaway food services.
As well as the issue of registrations, the ATO also suggested that tip-offs from the public have inspired the Victorian visits.
“We also take community referrals about businesses who are suspected of doing the wrong thing into account when selecting where to visit,” Mr Holt said.
“Misrepresenting sales, not reporting income from online transactions and poor record keeping are some of the common concerns the community has raised with us.”
Previous site visits in Victoria have targeted Box Hill, Cranbourne and Geelong.
Accountants, tax practitioners also to be targeted
It is not just businesses that will be targeted as part of the latest round of site visits, however.
The ATO has revealed that inspectors will also be looking to visit the tax practitioners of SMEs in these target areas as well.
“These visits will enable us to better understand the drivers behind agent behaviour and provide education and support to encourage willing participation of their clients in our tax and super systems,” it said.
Asked why tax practitioners are also be targeted, the ATO spokesperson replied, “Tax agents play an important role in helping their clients get their tax and super right.”
“Sometimes some agents are pressured by their clients to over-claim expenses, while others are more opportunistic or intentional with their behaviour,” the spokesperson said.
“We will develop a tailored approach to engage with each agent. Where we identify opportunities or gaps, we will let them know about the educational and support products available to assist them. We may also ask them to review their practices and give them the opportunity to correct information where there are identified issues.”
What can businesses expect during a visit?
“ATO staff will be talking to local businesses to understand how they operate and identify any issues where help is required. The visits should only take around 30 minutes,” its spokesperson told My Business.
“Our officers may ask questions about record keeping and payment facilities, registrations, outstanding lodgments, tax debts and employer obligations such as superannuation; explain how to fix any mistakes; discuss the benefits of electronic record keeping and payment methods; show business owners the ATO tools and assistance products available for you; [and] help answer questions about their tax affairs.”
Ongoing campaign against undeclared income
Doorknocking businesses is part of an ongoing campaign by the ATO, aimed at identifying undeclared income but also as part of a more proactive approach to tax education for business operators.
In conjunction with the site visits, the ATO will also be holding tax information sessions, as well as dedicated information sessions on Single Touch Payroll, which kicks in for employers with fewer than 20 employees from 1 July this year.
It has set up a dedicated website for businesses with more information about its site visits and information sessions.
The program of site visits is set to be expanded in the new financial year, with the ATO anticipating it will visit around 10,000 businesses nationwide in 2019-20.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.