According to new ATO statistics, there is a $10 billion tax gap in the small business sector. This indicates that $10 billion worth of tax is being hidden from income reports and not paid by Australian small businesses.
The enormous figure has motivated an increase in regulatory measures and audits from the tax office.
Having just received a $1 billion funding boost from the government, the ATO now have enough resources to conduct thorough audits into any small businesses that may not be adhering to their tax requirements.
To put it simply: if you or your tax accountant are lodging dodgy figures, you won’t be able to get away with it for much longer.
In particular, the ATO will be examining:
- any out-of-the-ordinary deductions
- taxpayers who disclose low taxable incomes but have a lavish lifestyle
- non-compliance with superannuation
- Division 7A and trust issues
Furthermore, the tax office will be honing in on the black economy and illegal phoenix activity.
They will also be ensuring that small businesses are adhering to new single touch payroll requirements for paying their employees.
The $10 billion tax gap for small businesses is significantly larger than the corporate tax gap at $1.8 billion, and even larger than the individual tax gap at $8.7 billion. We know that Division 7A is not handled well by most public accountants and there is an enormous amount of tax the ATO can recover in this area.
There are a number of ways that you can still minimise your tax whilst staying within your legal limits. The Tax Champions at Paris Financial have been reducing tax for small business for more than 40 years and know how Division 7A works for every client in every situation.
If you’d like to switch to an accountant who has the knowledge to reduce your tax legally, contact us today.