We take a look at the ATO initiatives that will make your life easier - and those that could get you in hot water.
The Australian Tax Office has revealed where it will be channelling its energies in the coming months and years – we take a look at the initiatives that will make your life easier, and those that could get you in hot water.
The good news:
A better attitude. Many business owners may roll their eyes at this one, but the ATO has taken great pains to reassure business owners that it really will work hard to improve relationships with small businesses this year.
In a recent speech in Canberra, second commissioner Neil Oleson has promised a shift towards a more two-way relationship, including “robust relationships and connections with the right stakeholders at the right time, and better consultation at a stewardship and issue level”.
“As an example, we will be working directly with small business to identify irritants and unnecessary compliance costs,” says Oleson. “Including giving access to a senior person in each state for small businesses to raise their concerns. We can then look to redesign processes that are unnecessarily burdensome to help reduce red tape, within the boundaries of what the law allows.”
Better advice. This policy of increased engagement will extend to legal rulings, says Oleson, and the ATO will be moving away from “correspondence-based, reactive processes" and towards early engagement strategies, reducing the time it takes to respond to private ruling requests.
“These emphasise open and transparent communication, are usually face-to-face and provide an upfront understanding of roles and responsibilities for each party through the process.”
The ATO has also implemented an after-hours call back service and launched the online tool Small Business Assist to help small businesses meet their tax obligations.
Standard Business Reporting. Oleson has promised an expansion of SBR services that aim to “radically reduce the compliance burden for business without compromising the quality and accuracy of information required by State and Commonwealth governments”.
This promise includes a continued roll-out of the standards for superannuation transactions which began in July. From 2015 small businesses will be required to use the new format. Also in 2015, the ATO will begin its transition of Electronic Lodgement Service to SBR.
Using SBR payroll information to allow the ATO to offer a single account-based view of a person’s taxation relationship with the regulator is also on the cards, something which Oleson acknowledges is “a source of irritation” for small business.
The ATO has also vowed to work with other agencies, including the Department of Human Services and the Insolvency and Trustee Service Australia, to further expand SBR usage.
Easier tax returns. Small businesses spend an average of 493 hours per year on taxes. Of this, 74 hours is spent on calculating taxes, completing tax returns and remitting tax, according to a recent report.
Oleson has promised over one million Australians will be offered ‘push’ tax returns next year – a system which uses information already collected by the ATO to generate a tax return, which is then sent to the taxpayer for approval.
While this ‘tick-the-box’ system will only initially be available to individuals with simple tax situations, it points to a real drive by the ATO to simplify the tax return process.
More privacy. With the launch of the National Business Names Register last year, home-based businesses were required to supply a personal address for each business name.
Small Business Minister Bruce Billson recently introduced changes which allow a postal address to be used instead.
This not only alleviates privacy concerns, says ASIC, but benefits rural businesses where mail cannot be delivered to a physical address.
Digitisation. This year the ATO has offered e-tax for Mac users and a mobile app for Apple, Android and Windows devices. Oleson has promised more apps that will aid small businesses in meeting their tax obligations and “reduce their current high debt levels with the tax office”. There are also plans for a superannuation app.
The hit-list:
Earlier this year the ATO announced the implementation of a $379m task force that would target fraud and non-compliance across broad swathes of the Australian public. Here’s a look at what areas of your brokerage the ATO has its eye on:
- Increased audits for small business. Last year, the ATO completed 931 income tax reviews and audits for small and medium business, raising nearly $700m. It has vowed to increase that number, and target small businesses that are over-claiming concessions, attempting to hide income, operate in the cash economy and claim capital gains tax concessions they are not entitled to.
- Employer obligations. The ATO plans to review 17,700 businesses and 950 employers to ensure employer obligations are met and employers are not trying to avoid obligations by treating workers as contractors rather than employees.
- Fringe Benefit Tax. While Abbott has vowed to put a halt on proposed changes to FBTs on company cars, the ATO says it will focus on employers who have a FBT obligation but are not in the system, using third-party information to identify them.
- GST. A recent report found Business Activity Statements to be one of the most burdensome of all compliance regulations for small business, and that means BAS is high up on the ATO hit-list. Over 40,000 activity statement refunds will be reviewed to ensure businesses are correctly reporting GST transactions.
- Trusts. Any business that misuses trusts in an attempt to avoid paying their fair share of tax will be targeted, including profit extraction schemes, concealment of income and mischaracterised transactions.
What do you think of the ATO's promises? Are you optimistic for the year ahead? Share your thoughts below.
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