Download your ATO Hit List

How Compliance Is Checked

You are in business because you are very good at what you do. This doesn’t mean you need to be a financial whizz-kid. You rely on quality accounting advice from your professional, accredited accountant. Keeping up-to-date is a necessity for all professionals, accountants included.

If you are a business owner you should forward this checklist to your accountant. It may be they have been too busy to delve into the constantly shifting focus of the Australian Tax Office and you could be missing out on tax deductions.

Worse still you it is your signature on the accountant’s EOFY reports that says, “To the best of my knowledge, these reports are accurate and the numbers are correct.”

Take the pressure off yourself and your accountant with this simple checklist. Ask you accountant to tick all that may apply to you.

Then ask them to ensure that your bookkeeper and the reports prepared comply with the items on the ATO Hit List.

To make this really easy, just send your bookkeeper and your accountant this link, and ask them to complete the checklist for you, highlighting things that they feel needs your immediate attention.

Inter Agency Data Sharing

Social media profiles, online content or statistics, banking data, ASIC, AUSTRAC or other government agency data is being ‘mined’ by the ATO and used to create your personal and business persona. Over the past 2 years with the assistance of increased funding, specialist staff and one of the worlds most sophisticated data matching systems, the ATO is on the warpath. As pressure is applied by the Government to increase revenue to allow for the funding of Infrastructure, Welfare, Health, Education and Defence spending, meeting targets has become more important than ever within the ATO.

Recently the ATO has come under fire for its ‘Collect At All Costs’ approach to Small Business, which has resulted in more businesses than ever sliding into bankruptcy and cost their owners every asset they have worked hard to purchase over years in business.

Successful prosecution of business owners who have underpaid staff, purchased luxury cars or lived a life above the means indicated by their tax returns provide valuable insight into how the process and systems of the ATO link a business through the interagency data sharing and social media cross profiling components of the system.

It was a flashy new luxury sports car which alerted the ATO to a “Lifestyle Mismatch” with income being declared on annual ATO returns. Selfies with the car on expensive dates posted on Facebook and Twitter resulted in the triggering of an investigation which snared even a Deputy Commissioner of Taxation.

For the past 4 years or so, the ATO has begun fine tuning its business benchmarks program. Using BAS returns claiming input tax credits matched to income generated per dollar of expenditure provided data which highlighted cash economy income. In essence, the ATO knows on average, how many cups of coffee (and how much each one sells for) per kilogram of coffee beans purchased by a café. The input GST claimed gives the amount of coffee purchased and a failure to pay the corresponding GST on cups of coffee sold at a retail level now generates an automated, “Please review your BAS claims, as it appears you have made errors in your GST payable.” Failure to substantiate the discrepancy (knowing that no two businesses are exactly alike) results in a penalty being levied against the small business.

A new series of random audits gave the ATO enough data on ‘gaps’ between legitimate and dodgy claims. Extrapolating the numbers across the taxpaying community produced figures which allowed the ATO to target particular deductions. It was important that the ATO collect the most revenue for the least effort or change to systems, to allow it to meet hefty new targets set by the government.

Sadly, it will force many small businesses into bankruptcy, their owner’s often facing severe financial, personal and mental stress in the process.

If you know what is going on and your bookkeeping and accounting professionals are up to date with the latest from the ATO, you have the best possible opportunity to avoid the nasty “Tax Bill Shock” we see so often in daily work.