ATO to seek billions from SMEs
Fairfax Media has reported that the Australian Taxation Office (ATO) is implementing an auditing scheme for small to medium enterprises and individuals this financial year. This is a new attempt from the ATO to recover a predicted $3 billion that has gone missing due to tax evasion.
These checks will affect 600 random SMEs and individuals throughout the country. In a November 5 article, Fairfax Media quotes an ATO spokesman as saying only a "handful" of these 600 would be upgraded to a full audit.
Only instances in which "strong reasons to believe the taxpayer has not complied with their tax obligations" are identified as those they would escalate.
High-wealth individuals and companies will not be affected.
This decision was made after a panel of experts advised the ATO to only use random audits on small businesses and individuals, as large-scale audits on big businesses would be prohibitively expensive, complex and ultimately inefficient in comparison to their use on SMEs.
Billions lost last year
According to a report released last year, the ATO attempted to recover $5.6 billion from big businesses from 2014 – 2015, but was forced to write off almost half that amount.
This was due to a decision to avoid expensive and time-consuming legal proceedings that would have ensued from attempting to get the full amount.
The same report recorded that $447 million was sought from SMEs. A third of this was written off after all settlements concluded.
Approximately $3.8 billion was recovered from the total pre-settlement target of $7.8 billion.
In order to avoid accidental inaccurate tax payments, many SMEs rely on a professional third party to organise their taxes, rather than make the attempt themselves. This provides a more efficient and less stressful means of paying your tax and avoiding expensive audits.