As part of the operation, the tax accounting network said, the tax office will request information from 11 major Australian financial institutions, including details of all credit and debit card payments received by small businesses for the 2014-15 financial year, with this data subsequently matched against ATO records in an attempt to identify businesses that are failing to meet their tax obligations.
Mark Chapman, director of tax communications, H&R Block, warned that those businesses that are cutting corners need to be concerned.
“I think it’s definitely the case that there will be some businesses that are going to be getting a shock”, he said.
According to Mr Chapman, the tax office has been concerned about businesses failing to properly declare all of their transactions, be they income or expenses, and that ATO actions are a “potentially effective way of clamping down on some of these businesses”.
“Now that they’re in a position to obtain all of this information from the financial institutions, particularly the banks, this gives them a very powerful weapon to basically look beyond the businesses' own records and to see what information third parties have,” Mr Chapman stated.
Complacency is a significant issue in tax reporting, with Mr Chapman noting that many individuals and businesses “carry on flying by the seat of their pants” when it comes to disclosing income and expenses.
“I think a lot of businesses tend to sleepwalk into these situations, and think that the ATO makes the first move, and lets them know if they’re being reviewed or audited. When that happens it’s too late to make a voluntary disclosure,” he said.
Mr Chapman stressed that voluntarily disclosing is an effective means of avoiding penalties and interest that would be incurred if an audit were to take place, whilst noting that many businesses may simply be unaware that such a system exists.
“It’s incumbent on tax professionals to basically make their clients aware if there are issues that maybe the accountant has discovered, and at that point they really need to be prompting the client to make a voluntary disclosure,” he said.
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