Your Business: What the ATO is looking for this EOFY
June 2019
- setting up or changing to a company structure
- claiming motor vehicle expenses
- who may not be correctly apportioning between personal and business use
Tax avoidance under the microscope
- international risk - international profit shifting and corporate restructuring
- inappropriate arrangements that seek to extract profits or capital without the right amount of tax being paid
- high risk trust arrangements attempting to gain advantage beyond ordinary trust arrangements or tax planning associated with genuine business or family dealings.
If the ATO suspect there is a problem, they may contact taxpayers to justify why decisions were made to structure affairs or the affairs of your entity in a particular way.
Taxpayers contacted by the ATO can engage their accountant to liaise on their behalf or simply to ensure that their arrangements are appropriate.
No tax deductions if you don't meet your tax obligations
- of salary, wages, commissions, bonuses or allowances to an employee;
- of directors' fees;
- to a religious practitioner;
- under a labour hire arrangement; or
- made for services where the supplier does not provide their ABN.
The main exception is where there is a mistake and tax payers can voluntarily correct it before the ATO begins a review or audit.
Don't wait if you discover a mistake
In these circumstances, a deduction may still be available if you voluntarily correct the problem but penalties may still apply for the failure to withhold the correct amount of tax.
There is also an exception for situations where you make payments to a contractor but then later realise that they should have been paid as an employee, as long as the worker has provided an ABN.
The Government has also proposed that from 1 July 2021, the ABNs of those required to lodge a tax return but have not done so will be cancelled, and from 1 July 2022, ABN holders will be required to confirm the accuracy of their Australian Business Register details each year.
Recording payments to contractors
Businesses within the building and construction industry, cleaning, and courier services need to report payments to contractors in the year ending 30 June 2019 by 28
August 2019.
This reporting requirement is focussed on industries identified as active participants in the black economy, raising around $2.7bn per year in income and GST liabilities.
When in doubt, speak to your accountant
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Disclaimer
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
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