Tax Office Launch Mobile Strike Teams
The Tax Office is on the move and are deploying what the Deputy Commissioner for Small Business, Deborah Jenkins describes as ‘mobile strike teams’ to uncover business owners who are not complying and avoiding tax. There is a clear focus on the cash economy and the initiative is designed to “protect honest businesses” from being undermined by “competitors who get an unfair advantage when they don’t report all of their income”.
The Tax Office plans to visit 10,000 small businesses in the 2019 financial year in a nationwide compliance push and already this year the strike teams have visited 3,000 businesses in six areas including Box Hill in Victoria, the Adelaide CBD and Broadbeach on the Gold Coast. All up 30 locations will be targeted and next on the hit list are Alice Springs, Darwin and Katherine in the Northern Territory, Geelong in Victoria, Wollongong in NSW and Launceston in Tasmania. Town Hall information sessions are being included as part of the campaign and presentations are being delivered in both English and Mandarin.
Jenkins said the ATO wants to work with businesses that have unintentionally made tax errors to fix issues while using its powers to hold those intentionally dodging tax to account. She explained the Tax Office is paying particular attention to the claiming of private expenses for business purposes including motor vehicles, home office expenses and claims for overseas travel. The split of claims between business and personal use was on the radar as was the omission of income and a lack of understanding over how tax applies to different business structures.
The Common Mistakes the ATO has Observed Recently:
- Forgetting to check all bank accounts for interest income
- Forgetting to correctly report dividends and franking credits
- Poorly substantiated small business expense claims
- Businesses not completing annual reconciliation of income tax return information and Business Activity Statements (BAS)
- Small calculation errors, including transposition of figures
- Claiming business expenses as GST inclusive rather than GST exclusive
- Overclaiming tax agent fees where they relate to more than one entity or taxpayer
- Not including income from coupon sales
The Deputy Commissioner for Small Business Deborah Jenkins advice for business owners includes:
- To claim an expense, the money must have been spent on your business — this doesn’t include childcare fees or clothes for the family.
- When a claim is a mix of business and private, only claim the business portion.
- Records need to be provided to demonstrate how claims have been calculated, such as bank statements or receipts.
- Include all income, including cash, EFTPOS and online sales.
- Sole traders still need to lodge tax returns, even if their income is below the $18,200 annual tax-free threshold.
If you have any concerns or queries regarding the allocation of expenses or your compliance obligations, please don’t hesitate to contact our office today.