08 Apr Industry News Update: ATO’S Data Matching Increases & Focuses on SME
Now more than ever it is important for businesses to be honest and forthcoming with their income as the ATO is ramping up its scrutiny of small business tax affairs through the tax gap audit program. The regulator has a constant growing wealth of data and is actively investing in risk assessments and cross-checking the flow of funds within individual groups. This includes cross-checking data from the Taxable Payment Reporting System (TPRS), land titles, motor vehicles and bank accounts against structured groups to identify incorrect reporting and unexplained wealth. Here is how to ensure your business is correctly accounting for your income and use of assets:
Be more aware of the compliance landscape for small business:
The compliance landscape is changing for small businesses through the removal of deductions for unpaid directors fees and the increased reporting visibility through the TPRS and the Single Touch Payroll (STP). Due to COVID-19, the JobKeeper stimulus has resulted in the increase of taxpayers bringing their personal information and reporting obligations up to date.
The increase of information made available over this financial year, the connections between different tax and transfer policies, reporting requirements and government agencies, is hardening the environment against businesses who intentionally hide or extract income tax-free. This is making it even more important for businesses to stay up to date with the ATO compliance landscape.
Take advantage of the ATO’s online information:
The ATO offers a wealth of information on how to avoid any misinformation or mistaken wrongdoing when it comes to taking care of your businesses tax obligations. The General Guidance information identifies 5 ways businesses can properly use company money or assets for private use. These include wages, salaries and directors fees, loan repayments made to the company, a loan from another company, a fringe benefit, and dividends.
The ATO also has a varied supply of business record-keeping requirement reports, made for businesses of all kinds, designed to help educate and assist businesses in the expectations for business record keeping. This information is especially valuable in making the annual tax time run smoother.
Get back to basics:
Open a separate account for all of your businesses income and expenses, this helps business owners manage their funds. This also helps keep track of the regulated tax requirements of transparency when it comes to businesses income, payment and loans to and from shareholders and their associates.
All of the information above is given to help small businesses understand and comply with the ATO requirements of small businesses. The ATO is making an effort to filter out businesses that are taking advantage of the system and not complying with the TPRS by hiding or extracting income tax-free.
For more information on how to keep your business in compliance with the ATO’s regulations and procedures, please don’t hesitate to contact your Conrad Carlile team online or on 07 3871 1522. As experts in all areas of accounting, taxation and business advice, we pride ourselves on customer service and helping our clients get the best outcome for their situation.