Happy new financial year!
With the start of 2013-14 tax year the ATO is under even more pressure from the government to boost revenue. So, the ATO is planning on taking “firm action” against people who they see as ‘cheating’ the system.
But the good news is, the details of the ATO’s compliance focus were recently revealed including who their new targets are likely to be, giving both individuals and businesses the heads up before action is taken. Forewarned is to be forearmed.
The ATO plan on focusing on four broad areas this financial year including:
- Individuals who fail to declare income or make incorrect claims for deductions
- Tax avoidance associated with the use of complex business structures
- Correct reporting of taxable income by wealthy individuals
- Participation in tax planning schemes
How are they going to do this?
By expanding and enhancing their data matching and audit capabilities. ie: they’re going to match more than 640 million transactions to ensure income is reported correctly and claims are not overstated. The ATO also plan to have more audits of individuals and businesses – from small business to the corporates.
Who are the ATO targeting?
Each year, the ATO release a list of their most likely targets. This year the focus will be on;
- Construction and building industry – including tradies, supervisors and managers
- Sales and marketing managers
- Large and multinational businesses (known for shifting their profits off-shore)
- Cafes, restaurants and real estate agencies
What will they likely focus on?
- Work related expenses: The ATO will be focusing on “incorrectly claimed” work deductions, concessions, offsets and credits. They will be paying close attention on high claims made by tradies, project managers and sales and marketing managers. If individuals or businesses are claiming high work-related expenses, they will be at high risk of being audited.
- Misuse of trusts: The ATO have set up a new task force to deal with those who seek to misuse trusts in an attempt to avoid paying their fair share of tax. These include profit extraction schemes, concealment of income and mischaracterized transactions.
- Profit shifting to tax havens: They are working closely with overseas tax jurisdictions and law enforcement agencies to ensure that large companies that operate globally pay the right amount of tax in the appropriate country. The ATO plan to take 250 risk reviews and 70 audits covering tax consolidation issues, capital gains and complex structures.
- Correct reporting of PAYG withholding and fringe benefits: The ATO plan to review 17,700 businesses to ensure they are meeting employer obligations. They will also review 41,000 activity statement refunds to ensure businesses are correctly reporting their GST transactions, to identify instances of fraud.
- Superannuation and self-managed super: There will be a huge crack down on employers who aren’t complying with their superannuation guarantee, focusing on cafes and restaurants and real estates. The ATO will also focus on self-managed super funds that misuse the concessional tax environment deliberately or unintentionally.
As with all things tax, the only constant is change, so it’s always best to seek advice from a trusted advisor. If we can help, feel free to give either Greg or I a call on 02 6023 1700 or drop us a note.