The ATO is warning small businesses that it is focusing on poor compliance behaviours.
Small businesses are sole traders, companies, trusts or partnerships that operate a business for all or part of the financial year, and, have an aggregated annual turnover of less than $10 million.
The ATO looks closely at small businesses that:
Knowingly operate outside of the system, like not declaring all income and over-claiming expenses
Deliberately don’t report or register correctly, and don’t lodge and pay in full and on time
Don’t know their tax and super obligations, including employer responsibilities
Pay employees in cash and don’t declare income to avoid their tax and super obligations
Use business funds and assets to support their personal lifestyle, tax-free
Have poor record keeping and/or cash flow management.
The ATO is also encouraging small businesses to take simple steps of avoid compliance actions, such as:
Staying on top of ATO debts
Keeping separate bank accounts for separate obligations
Ensuring good records are kept – the ATO continues to see instances where income is omitted from tax returns, particularly from businesses that accept cash payments or have inconsistent record keeping practices.
