Have you made a New Year’s Resolution to get your finances and tax in order? Making the resolution is easy and often soon forgotten however, all is not lost. We can help you turn your resolution (good intentions) into a reality that benefits you and your business.
The Australian Taxation Office (ATO) is closing in fast on everyone who doesn’t properly declare their income and pay the correct amount of tax.
As proactive Tax Accountants, we want to help you be aware of what the ATO is doing and how you can protect yourself.
How Does the ATO know?
The ATO is linking databases of property sales, car purchases, international plane flights, dividends paid from shares, and sales of shares and investments with the income declared on your Tax Return.
If your Tax Return income doesn’t match with your spending or repayment of loans, then the ATO will probably “red flag” you for a tax audit.
These databases have not been linked before like this, so we’re expecting to see a huge increase in the number of tax audits over the next 12 months.
Business Cash Receipts Not Declared
Many small business owners pocket some of their cash takings each week and don’t declare this in their Tax Returns.
The ATO now has the tools to catch this out.
When your business Tax Return is lodged, the ATO compares your profit and other key indicators as a % of your total sales with other businesses in your industry. If your profit % is lower than average, then the ATO may decide to do a tax audit just to see if you’re properly declaring all the income you actually receive, or if the expenses you’ve claimed are actually allowable as tax deductions.
Also, not declaring cash income from your business could result in you getting a much smaller price for the sale of your business. We’ll discuss this in a future article.
What can we do to help you?
We have 2 keys roles as tax accountants.
1. Ensure our clients pay the least amount of tax they legally should.
2. Assist our clients to lodge a correct tax return, so if they’re audited by the ATO they can sleep peacefully at night knowing that you’ve done the right thing.
While nobody likes paying tax, at the end of the day it simply is a normal part of life that we need to manage as best as possible within the boundaries of the law.
If you don’t declare all income you receive and if you claim as expenses things that aren’t properly allowable tax deductions – then if you’re audited and lose you will have to pay back tax PLUS pay large penalties to the ATO.
Is this really worth the risk?
We’re on your side. Talk to us today!
We’ll help you fight the ATO if the occasion is needed. But you need to do the right thing – even if you disagree with the tax laws.
Please – don’t doubt our resolve to help you. We’re on your side. And sometimes your good friends need to warn you of things you mightn’t see yourself.