Over 85% of Australians believe it’s unfair to use cash to avoid paying their fair share of tax and the ATO is undertaking an initiative to identify cash businesses that may be avoiding tax.
The ATO are cracking down on businesses that are pushing cash sales by not offering other payment facilities. Restaurants, cafes, pubs, hairdressers, beauty salons and home based businesses are those typically associated with having a high amount of cash transactions. Businesses in those industries are expected to be targeted first.
This doesn’t intend to implicate all businesses in those industries, but it does send a message that the industry is under close scrutiny.
Sophisticated data matching tools have been developed to assist them to identify businesses that are deemed to be high risk. Information is being collected from a number of sources, including banks, other government agencies and industry suppliers. The ATO will also receive information regarding purchasing major items including boats/cars and real property which they can use to deduce whether or not your taxable income reported in your tax returns reflects the lifestyle you are living.
Equally the ATO will compare reported income and expenses to industry benchmarks to identify anomalies.
Most businesses do the right thing and will have nothing to worry about, however an ATO audit can be costly and time consuming, even when no wrong doing is found. Many accounting businesses offer accounting audit insurance to mitigate these costs.
Author: Nick Vincent
Email: [email protected]
