Newsletter
October 2012 Newsletter
ATO focus on small businesses and wealthy individuals - Technology makes them smarter by the day!
The ATO has launched a public online resource that spells out its tax compliance approach to small businesses and wealthy individuals. The new resource is available on the ATO website at www.ato.gov.au/smecompliance.
This online resource contains information on how the ATO conducts itself in compliance activities and the tax risks that may attract its attention. It also explains that the ATO can, through powerful data-mining techniques, obtain an indicative view of a “private group” of entities that is under the control of an individual and their associates.
Key tax risks that may attract ATO attention include:
• tax performance that varies substantially from business performance;
• inconsistencies in activity statements or spikes in refund claims;
• large, one-off or unusual transactions;
• tax and economic performance that varies significantly from similar businesses in the same industry;
• unexplained losses;
• tax outcomes inconsistent with the intent of tax law;
• lifestyles not supported by after-tax income;
• treating private assets as business assets;
• not disclosing offshore dealings with overseas entities, especially low-tax jurisdictions and tax havens that allow banking secrecy;
• using complex structures and intra-group transactions to minimise tax;
• poor governance and risk-management systems;
• distortions and inconsistencies in market valuations and apportionments; and
• business performance that falls outside small business benchmarks (for businesses with turnover of up to $15 million).
TIP: The ATO’s main tool for detecting non-compliance is matching information reported to it by taxpayers and third parties, such as financial institutions both in Australia and overseas. The ATO says its matching capabilities have grown strongly over the years. This financial year, the ATO expects to match over 600 million transactions.