ATO restarts small business taxpayer audits

The ATO has recommenced its work to address tax compliance risks in the small business segment, continuing ongoing and new taxpayer audits, having been focused on the COVID-19 stimulus measures for much of the year.

In a speech addressing the Chartered Accountants Australia and New Zealand, Deputy Commissioner Deborah Jenkins said the ATO was conscious of the pandemic’s impact on this segment, and will deal with each taxpayer according to their circumstances. She encouraged tax professionals to look out for common errors, such as taxpayers failing to declare cash sales or incorrectly claiming personal expenses.

The ATO will continue using Taxable Payments Reporting system data to check that contractors in the cleaning, courier, building and construction industries are meeting their income tax and GST obligations in full. Tax agents with clients in these industries who have under-declared income in the 2019 tax return can expect to be contacted by the ATO starting from November 2020.

As part of its black economy program, the ATO will identify tax agents with higher than normal levels of risk in their client base, and will engage with agents accordingly. Other areas of focus are taxpayers with loss claims, and the extraction of funds from small business companies that are not reported. The ATO will also revise its GST risk model to ensure high risk refunds are detected before any payments are made.

The ATO’s future focus will be around digital tools and more data analysis to ensure compliance. Among other things, a new Online Services for Business tool will be rolled out in 2021, as well as the final digital version of its cash flow coaching kit to assist small businesses better manage their cash flow.