With such a large slice of Australia’s GDP missing, it’s little wonder that the ATO has set up a taskforce to increase audit activity and crackdown on small businesses and individuals who report their taxes incorrectly. Also set to increase is audit insurance as protection against the unexpected fees that can be associated with an audit.
Deliberate misrepresentation of tax information has been coined ‘the black economy’ by the ATO. Greatest areas of concern around the black economy include:
Small businesses – the greatest offender with a shortfall of 6.4 per cent or $8.76 billion.
Individuals not in business
ATO Deputy Commissioner Deborah Jenkins acknowledged that the majority of small businesses are doing what they can to comply: “We’ve found that some small businesses are making mistakes with their tax, but these are often unintentional errors which are easily fixed. Our objective is to support these honest small businesses to better understand their obligations and to help them get it right the first time.”
And then, she says, there’s the other sort: “Hiding income, exaggerating expenses and operating outside the system are all considered to be black economy behaviours. Businesses doing the wrong thing are about to attract our full attention,” Ms Jenkins said.
An audit can be a major unwanted surprise for any business or individual. It often entails many hours of work by the business owner or individual, their accountant, legal representatives and/or bookkeeping support. This incurs large fees, not to mention the cost of the interruption itself.
There is an option to insure against the professional fees related to an audit. It is called Audit Shield. In the wake of the ATO analysis and commitment to crack-down audits, we have worked with our supplier to reduce costs and maximise protection. Audit Shield is retrospective, so all previously lodged returns are also included in the coverage. Income Tax, GST and BAS, PAYG Withholding, Fringe Benefits Tax, Land Tax, Stamp Duty, WorkCover and Self Managed Superannuation Funds (SMSFs) are just a few items included in the extensive Audit Shield coverage. Audit Shield Insurance is tax deductible. If you would like to receive an obligation-free quote, click here.