The Australian Taxation Office yesterday announced their compliance program for 2009/10 where they identify their various targets for the year ahead.
If you’re a tax cheat or a potential tax cheat then the compliance program is a must read. The ATO actually tip you off at what they’re looking at and you would have to be a nong not to read and comprehend its contents.
While truckies and electricians seem to have been the focus of the popular press the document is far more in-depth and comprehensive than a mere crackdown on some blue collar occupations.
It has been ATO tradition that the commissioner announces the release of the compliance program at a swish business lunch where he usually made a speech to the throng which was attended by newspaper hacks who gathered courtesy of the free lunch offered.
Much to the hungry hacks chagrin, this year it was announced by press release. Crikey understands that tax chief Michael D’Ascenzo was told by the government to make the release low key this year because of the global financial crisis (GFC) and its effect on the taxpayer community. One tax insider told me, “The last thing a struggling small business wants to hear is that the bloody tax office is out to get them”.
Crumbling tax revenues due to the GFC and the government running a budget deficit due to their various stimulus packages puts a lot of pressure on the tax administration to bring home the bacon.
D’Ascenzo has provided a small business assistance package to assist them with debt repayments such as an interest free period and generous repayment plans. He needs to ensure that his message gets to his officers at the coalface. He also needs to ensure that his zealous auditors don’t break the rules by threatening taxpayers with prosecution if they don’t pay the big tax bill or imposing larger than normal penalties to help boost the coffers.
Crikey readers should have a look here to see how much the ATO have raised during their compliance activities during 2008/09. Clearly the ATO have not been idle!
The ATO’s areas of focus this year:
Individuals:
Work related expense claims
Truck drivers
Sales and marketing managers
Sales representatives
Electricians
Investors’ capital gains and losses.
Wealthy individuals. Extending compliance activities to look at individuals with a net wealth between $5 and $30 million.
Small Business:
Refund fraud
Phoenix arrangements
GST Schemes
Dodgy schemes
Capital Gains tax
Employer obligations such as lodgements, payments etc
Large Business and International:
Merger and acquisition activities
Transfer Pricing
Cross border financing arrangements
Promoted tax exploitation schemes.
I have been recently doing some home renovations. I have been very surprised to find out that most tradesmen including painter, plumbers and electricians give you two quotes: the legal one and the cash one. If you choose the latter, you don’t pay the GST and get an additional discount on top of that. Obviously, you don’t get a tax invoice as all this is black money. This means that these guys are probably making well over 100K a year and declaring income to the ATO for a third of that. Very sweet for them indeed, but not fair for the rest of us that pay taxes and hence contribute to build the infrastructure that these people are using, at the end of the day, to make their business. So I am very glad if the ATO is chasing some of these cheaters.
I also have had a similar experience, but remember when you don’t pay the GST, you too are cheating the government of tax.
Really I don’t worry about Jim the painter, or Gary the plumber avoiding tax, what really gets me are the people who don’t even bother to put in a tax return. I met someone recently, self employed who has not put in a tax return for 10 years!! That’s 10 whole years of pocketing the cash!!
I feel as though the tax man is sitting outside my house ready to pounce as I struggle with the overwhelming burden of the 3 monthly BAS tax burden.
Stupid me, I’ll just skip the next 40 BASs like my tax dodging mate. The ATO don’t seem too interested in him.