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GST crackdown makes life hard in the home office

MORE than 10,500 WA businesses have been targeted by the Australian Taxation Office in a May 31 crackdown on those who have been lax in lodging GST-related statements.

Just a month before the second anniversary of the GST’s introduction, WA tax practitioners believe the ATO action is probably long overdue, with many small businesses and one-man bands having been lulled into a false sense of security.

It is understood the crackdown could raise about $2.6 billion, more than 10 per cent of the total GST annual collection.

The WA businesses represent more than 10 per cent of 96,000 operators and investors who have missed two lodgement deadlines for their Business Activity Statements or Instalment Activity Statements.

Fines for missing the last two lodgement dates range from $660 for small business to $3300 for large businesses.

Missing the past three lodgement dates will cost small business $1210, medium business $2420 and large businesses $6050.

KPMG tax partner Phil Renshaw said the crackdown did not relate to the black economy but was simply a move by the ATO to clean up the bottom end of the spectrum.

“This is people at the bottom end of the spectrum who have, for some reason, not met their compliance targets,” he said.

“The (ATO) leniency to date may have caused some lethargy. It is the self-assessing type of taxpayers doing everything out of their own office, they are not lodging electronically and it just gets too hard.”

The ATO said major areas of concern were real estate agents, tradespeople in the construction industry, consultants, retailers, those in the finance and insurance sector and many in primary industry.

Fallon Group’s Tony Ince said the crackdown came on top of the alienation of personal services legislation that would force many self-employed people to reassess their situation.

“I am sure there are a lot of these businesses out there that have just got the shoebox,” Mr Ince said.

“They have done nothing and will feel the pinch. I think there may be a move back from the one-man band to being a paid employee.”

Neither Mr Ince nor Mr Renshaw believed the move was deliberately timed, from a political viewpoint.

However, PKF Chartered Accountants tax partner Mark Pollock said he believed that, with a Federal election out of the way, the Liberal Government could end two years of nurturing people through the new tax regime.

Mr Pollock said the UK experience with its GST equivalent, the VAT, showed that a significant amount of revenue could be raised from penalties and fines, particularly where the taxpayer failed to fight claims.

He said he believed property investors were very much at risk from losing from GST on trans-actions.

“They are people who don’t understand the rules and have not been willing to take professional advice,” Mr Pollock said.

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