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The ATO has small businesses, trusts, wealthy individuals and self-managed superannuation funds (SMSFs) firmly in its sights this year as it outlined which high-risk businesses and individuals it will focus on in its 2013-14 compliance crackdown. Below are the key scrutiny areas you should know about.
Payment of superannuation guarantee
Given the recent increase in the superannuation guarantee (S rate from 9% to 9.25%, the ATO will monitor employers to ensure they are paying their employees the correct superannuation amounts. Under the new director penalty regime (consult this office for more information), directors of employer companies may be held personally liable for their company’s unpaid SG debt. As a result of employee complaints in the following industries, the ATO will contact around 12,000 employers in:
• cafes and restaurants
• carpentry services, and
• real estate services.
CGT non-disclosure and under-reporting
The ATO is on the lookout for businesses engaged in complex restructuring in attempts to disguise asset sales or manipulate asset valuations to artificially reduce their CGT liabilities, and will conduct a number of audits and reviews to clamp down on these businesses.
“Some businesses attempt to reclassify revenue and capital items so they can inappropriately access concessional tax treatments. Others simply fail to disclose capital gains tax events or they claim the small business concessions when they are not eligible.”
Failure to identify and report fringe benefits
The ATO’s recent compliance activity on car fringe benefits revealed that in many cases where there was a fringe benefits tax (FBT) adjustment, employers had simply failed to recognise and report their FBT obligations. The ATO will increase its efforts to identify employers that may have an FBT obligation but are not in the FBT system.
Goods and services tax (GST)
GST is always on the forefront of ATO compliance activities, but this year it will focus on businesses in the mining, wholesale trade, manufacturing, financial and insurance services, government and retail trade in particular.
The ATO will also continue to monitor and investigate taxpayers that incorrectly report GST when they acquire, use, develop, sell or transfer real property – using external data to match property transactions with business activity statements (BAS) to identify under-reporting of sales.
Fraudulent phoenix activity in real property
The ATO has identified more than 2,000 property developers who have placed companies into liquidation to avoid financial obligations such as PAYG withholding, income tax, GST and super liabilities, and will demand lodgment from these developers, enforce payment and apply penalties.
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