ATO Cracks Down on Cash Jobs
The Australian Taxation Office (ATO) is intensifying its scrutiny of small businesses involved in cash jobs and questionable tax deductions. With over two million small business owners now under the ATO's watchful eye, it’s essential to understand the implications of this crackdown.
Updated Benchmarks for Small Businesses
The ATO has introduced new benchmarks covering 100 industries, including hairdressers, mechanics, and electricians. These benchmarks allow business owners to gauge their performance compared to similar businesses, particularly in terms of average expenses.
Tax Invest Accounting director Belinda Raso emphasized that these benchmarks were previously tools for assessing profitability. Now, however, the ATO employs them to identify businesses that might be underreporting income or overreporting deductions.
The Shift in ATO's Focus
Raso noted a significant shift in the ATO's focus toward small businesses, stating, "There’s been a massive shift in focus as far as the ATO is concerned with the tax gap." Businesses that fall outside of the benchmark ranges could potentially trigger an audit.
ATO assistant commissioner Tony Goding described the benchmarks as a valuable tool for small businesses. He stated, "Businesses that remain within industry benchmarks are generally less likely to attract the ATO’s attention."
Importance of Compliance
The ATO warns that small businesses participating in the shadow economy by avoiding tax obligations place undue pressure on compliant businesses. For instance, hairdressers earning between $50,000 to $150,000 annually should have average total expenses around 50% of their income.
For more detailed information on the benchmarks and how they may affect your business, visit the ATO's official page on small business benchmarks.
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