The ATO’S post-Covid money grab

Introduction:
ATO Bridging the Debt Gap
The ATO’S post-Covid money grab Following our article posted 24th May 2022, here is an update of what we are seeing and hearing about the ATO and its new targets for 2022-2023. The ATO has made it known that the pandemic-era leniency is coming to an end – the ATO’s position is that “the COVID pandemic is over"!

Well, life must be back to normal then, right? We all know this is not true and the struggle for small businesses will be felt for some time to come.  However, the pressure is on for the Government to replenish the coffers and part of their plan is to ramp up pressure on tax compliance areas.

A spokesperson for the ATO outlined in April earlier this year that the Tax Office will be focusing in these four main areas:

1. Debts owed to the Tax Office;
2. GST Fraud;
3. The Shadow Economy; and
4. Mistakes caused by complexity.

What does this mean for you?  It means a great opportunity to get on the front foot and attend to those niggling, outstanding tax matters – the stuff we wish would just “go away”!

Let’s break it down on what you can do:
The dreaded “D” word – Debt!
Assess your position.  Do you or your business currently have a debt with the ATO? Are your compliance obligations and lodgements up to date?  If you are unable to clear your ATO debt in one go, then a payment plan may be your next best option.  Don’t ignore ATO correspondence because (unfortunately) it won’t go away.

GST fraud – Everybody has a “mate” during the COVID pandemic who said:
“I just jumped into my myGov account, entered my details…(blah blah blah)….and got the money.  Everyone is doing it…(blah blah blah)”.

Some of these “mates” may have been legitimately entitled to it, a lot were not.  Unfortunately, there were a lot of people also registering “fake” businesses to claim GST refunds.  The ATO are able to data match claims that do not meet relevant benchmarks or are out of line.  If you believe you were pulled into any such scam, contact us or the ATO.

Shadow Economy –“Scared of his own shadow” – well, maybe you should be!
This refers to businesses who hide cash – asking a tradie to pay in cash or cashiers apologising as the EFTPOS machine that is “broken” again at the local café.  A common misconception is that if there is no digital trace of the revenue or income either via bank accounts or point of sale platforms, then how will the ATO ever find out?  Well, rest assured they do know because the ATO have data everywhere.  For example, they can determine the average amount of coffee sold at a coffee shop because they extrapolated the information from a wholesale coffee bean supplier who delivers to coffee shops.  All revenue is required to be reported to the ATO, so if you are still using cash in your business, ensure you are recording and reporting it.

Mistakes caused by complexity.
Education of your responsibilities and requirements for you personally or to operate your business is paramount in understanding your compliance obligations.  Mistakes due to misunderstanding of tax, superannuation, fringe benefits and Division 7A are just a few areas that the ATO are noticing a lot of errors.  Director Penalty Notices are now being issued by the ATO and they are collecting the penalties on those notices.  Don’t assume that you will never be audited, the Tax Gap Program is a randomly selected audit program that can identify you and your business group at random and put you through a year long audit in all tax areas including income tax, GST, Fringe Benefits Tax and Payroll.  This can be a costly and extremely stressful process that once you are selected, is unavoidable.  Audit insurance may be a consideration as, without it, an audit can be very expensive.  Audit insurance can cover you for

• Employer Obligation Audits & Reviews – PAYG / SG / FBT
• Income Tax Audits and Reviews
• BAS Audits and Review (pre & post assessment)
• Payroll Tax Investigations
• ATO (High Wealth) Audits and Reviews

Often, these audits are initiated by the relevant Government authorities and we, as your tax agents, are not involved unless required.

There is a bit of information to digest here.  We encourage you to keep up to date, be informed and proactive in the management of your obligations.
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Please reach out to us so we can assist you manage your requirements, debts and obligations – that is what we are here for!