The Tax Office will be visiting up to 400 small businesses in Maroochydore from early to mid-June as part of a nationwide crackdown on the black economy, which will see it visit 10,000 businesses across the country each year for the next three to four years.
Small businesses in Victoria can also expect a door knock from the ATO, with up to 700 small businesses in Dandenong and up to 500 businesses in Richmond set to get a visit from next week.
As part of the visits, the ATO will also be visiting tax practitioners of these small businesses as part of their early intervention strategy as it attempts to understand the drivers behind agent behaviour that may be leaning towards black economy behaviour.
The ATO has previously said that its early intervention program for agents will not be an audit, but a discussion to look at a vast range of behavioural indicators, including sizeable amounts of amendments happening after tax returns are lodged, high levels of outstanding returns, and disproportionate amount of work-related deductions to a client’s industry.
“We’ll discuss how you were selected as part of the population, we’ll provide information about what behavioural indicators that we’ve identified, and we’ll ask you to assist us in understanding your practices to get a better picture of your processes and what the drivers are behind what we're seeing,” said ATO assistant commissioner Colin Walker late last year.
“Again, you shouldn’t be worried about this – it is about ensuring we understand how you operate, we understand your practice, and we begin to understand what is causing problems,” he added.
“If we happen to find no problems, that you just happen to have a specific type of client, that your processes are excellent, then it will be a nice amicable discussion over a cup of tea and off we’ll go.”
Areas of concern
ATO assistant commissioner Peter Holt said small businesses in these areas can expect a knock on the door from the ATO, particularly if they are hiding sales and not declaring income, paying cash in hand, or underpaying workers.
Industries in focus for Maroochydore include legal and accounting services; cafes, restaurants and takeaway food services; building, pest control, agricultural and gardening services; and personal care services.
Industries in focus for Dandenong include building, pest control and gardening services; transport support services; automotive repair and maintenance; and postal and courier pick-up and delivery services.
Industries in focus for Richmond include cafés, restaurants and takeaway food services; computer system design and related services; other personal services; and architectural, engineering and technical services.
“We’re particularly concerned about businesses in these locations who are not registered for pay as you go (PAYG) withholding or GST,” said Mr Holt.
“We also encourage the community to share their concerns and help ensure local businesses are competing on a level playing field. Signs that a business may be operating in the black economy include poor record keeping or not providing receipts.”
The ATO recently reported back on its visits to 500 Tasmanian businesses earlier this year, hailing it as “highly successful”.
The Tax Office will be running a one-hour information session that will explain the purpose of the visits, what to expect if visited, and how to avoid common mistakes. A Single Touch Payroll (STP) information session will also be held on the same day.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.