Yet assistant commissioner at the Tax Office Peter Holt said that a visit from ATO officers is “definitely not” a foregone conclusion that the business has been flagged as doing something wrong.
Mr Holt, speaking on the My Business Podcast recently, outlined that the ATO is using a range of insights to target towns and suburbs with lower rates of compliance, high volumes of tip-offs and other warning signs such as a higher than average use of cash payments in a bid to weed out people deliberately doing the wrong thing — such as not declaring income — while simultaneously helping business owners to overcome honest mistakes.
“What those visits do is they provide us with an opportunity to talk to business owners and really help them get things right where they’re willing to,” Mr Holt said.
“During the visits, we often discuss their record keeping and payment facilities. We can talk to them about outstanding lodgements, we can help them with any tax debts and how to get back on track, and also about managing employee entitlements.
“So, really, it’s an opportunity for us to reach out, for businesses to reach out while we’re up there, just to help them get back on track if they’re willing to.”
He added: “And those that aren’t willing to do the right thing, we’ll follow up with further activity, which might be an audit at some stage.”
Greater visibility aimed at discouraging wrongdoing
According to Mr Holt, the decision to get out among the SME community was largely inspired by the Black Economy Taskforce report, which found that one of the main reasons for people engaging in dodgy behaviour was simply that “they didn’t think that they’re going to get caught”.
“They thought it was okay to get involved in and dealing in the illegal sort of operations, and not fully declare their income and overclaim their deductions,” he said.
“So, these mobile business visits are a part of us increasing our access to the community. It’s also a part of us checking on some of our risk profiles that we have, but it’s also a part of increasing our visibility to make sure that those businesses that are doing the right thing feel well supported.
“Those businesses that are trying to do the right thing but need a little bit of assistance, they have us out there available to them.”
Community fed up with tax cheats
Mr Holt also warned that the general community has had enough of businesses doing the wrong thing by their tax obligations and their workforces, which is driving high volumes of tip-offs about suspect behaviour — averaging around 230 every day.
“Those [businesses] that are intentionally doing the wrong thing need to get their house in order, because we will identify them and the community’s not reluctant in telling us about those that are doing the wrong thing and tipping us off,” he said.
“The community expects the ATO to deal with those sorts of behaviours. And importantly, it’s not a victimless crime... those that are cheating a little bit or a lot, it all adds up and the community is really missing out.”
Mr Holt said that “when the Black Economy Taskforce completed its review for government about two years ago, they estimated that the black economy was costing the community as much as $50 billion a year. And that’s really valuable financing for the communities missing out on for public services like schools, roads, healthcare and other infrastructure.”
Check out more insights from Mr Holt on the business visits program, which industries are most closely under scrutiny and what the ATO sees as a red flag warranting a closer look.