Small business tax cheats costing Australia billions
29th August 2019 | News
The Australian Tax Office (ATO) has revealed that figures from 2015-2016 showed a $11.1 billion tax gap from small businesses either avoiding or accidentally misstating their tax liabilities, with $7.1 billion of this lost to the black economy through tax evasion such as not declaring income, cash-in-hand or exaggerating expenses.
The ATO, on their website describe the tax gap as “an estimate of the difference between the amount the ATO collects and what we would have collected if every taxpayer was fully compliant with tax law.”
The ATO deputy commissioner Deborah Jenkins said: “The good news is we’ve found about 90% of income tax from small businesses is paid voluntarily or with little intervention from us. Considering how much small businesses have on their plate, I think this is a great result. Businesses who stay on top of their tax obligations have a few things in common. They keep good records, use technology to keep things on track, and are in regular contact with their advisers.
“The disappointing news is a small percentage of businesses are deliberately avoiding their tax obligations…So, to narrow the tax gap and makes things fairer, we’re implementing a number of initiatives. Such as, extending the Taxable Payments Reporting System to new industries, a new tip off hotline where people can report suspected black economy behaviour to us, and visiting close to 10,000 businesses around the country this financial year, to help them get on track and taking compliance action where we see deliberate black economy activity.”
In its efforts to identify tax cheats, the ATO is also expanding cross-referencing tools and cracking down on sales suppression software.
To help you understand your tax obligations, pop in to your local TaxAssist Accountants.