THE Australian Taxation Office plans to conduct 70,000 compliance reviews this year to detect and deal with businesses operating in the black economy.
This is 25,000 more than the previous year and is part of a wider crackdown on the black economy.
The crackdown was announced this month as part of the tax office’s 2003-04 compliance program.
Tax Commissioner Michael Carmody said additional resources provided by the Federal Government had enabled the tax office to increase the number of compliance staff by 850 to more than 3,000.
As part of its crackdown on the cash economy, the ATO plans to visit more than 30,000 businesses.
These businesses are likely to be in ‘high-risk’ industries, including building and construction, restaurants, cafes and takeaways, taxis, hairdressing, cleaning services, hotels and clubs, and motor vehicle and computer retailing.
The tax office has developed compliance programs for five segments of the taxpaying community: individuals; micro businesses; small to medium enterprises; large businesses and high wealth individuals; and non-profit and government organisations.
Micro businesses are defined as having annual turnover of less than $2 million while small to medium enterprises have turnover of between $2 million and $100 million.
The ATO has set a target to check compliance in 10 per cent of micro businesses.
To support this approach, tax office staff will review all activity statement obligations including GST, income tax instalments and PAYG withholding obligations.
This will include 27,000 checks to ensure businesses are correctly registered.
Businesses without an ABN or GST registration will be a particular focus, as will businesses that are registered for an ABN but appear to have been unregistered in the past.
The tax office plans to review the record keeping of 8,500 businesses, with a particular focus on the alcohol industry.
Common record keeping errors in the past have included failing to properly account for private use of business assets, and not accounting for the disposal of business assets, especially computers and motor vehicles.
Incorrect refunds are another area to come under close scrutiny.
The ATO plans to check more than 72,000 GST refunds and 18,000 income tax refunds for accuracy this year.
Particular attention is being paid to large refunds and to refunds associated with recently registered businesses.
The payment of compulsory superannuation contributions will continue to receive close scrutiny.
More than 30,000 employers will be audited this year, either in response to notifications from staff that have not received their superannuation contributions, or as a follow-up to work commenced last year to identify ‘at risk’ employers.
This work involves matching payment summaries with superannuation surcharge contribution data provided by funds.
In the SME segment, the tax office plans to contact over 26,000 businesses this year, or about one-quarter of all SMEs.
The contacts will range from phone calls and letters through to interviews, risk reviews and audits.
About 820 SMEs will be subject to risk reviews using a new approach that looks at the overall tax performance of a business and identifies any key risks.
The stages of these risk reviews include an internal risk analysis, an interview with the business, a review of records and possibly a specific audit.
The ATO is paying particular attention to shareholder loan accounts being inappropriately used to disguise income.
It will check that loan accounts are properly recognised with formal loan agreements, and that those in debit are being operated according to the law.
Failure to report GST on the sale of business assets has been identified as an issue with both SMEs and microbusinesses. The tax office plans to use external data to identify businesses that have sold a range of business assets, including property, motor vehicles and aircraft.
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