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ATO reveals small business hit list to combat tax debt
The Tax Office hopes shedding light on its enforcement priorities will improve taxpayer compliance.
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The ATO has laid out its latest enforcement priorities for small businesses in an attempt to close the tax gap and claw back growing levels of collectable debt.
Taxpayers who diverted business income for personal use, gamed deductions and concessions, and operated outside of the system would be under the microscope this quarter, deputy commissioner Will Day told attendees of the IPA’s National Congress on Thursday.
The ATO's small business focus comes after data released in August showed their unpaid tax debts grew to $35.6 billion in 2024, or around two-thirds of the total $54 billion debt book.
The small business tax gap also sits at 12.6 per cent, which Day said was caused by mistakes, opportunistic behaviours and deliberate tax evasion. The tax gap for larger companies is 4.2 per cent.
“If you look at both the tax gap and the debt book, they are both symptoms of a system operating less than optimally,” Day said.
“We need to reduce this revenue gap, and in doing so, we need to address the drivers that contribute to some small businesses not paying the right amount of tax, so that the system is fairer for all.”
Crackdown on Div 7A, deductions, shadow economy
To zero in on drivers of non-compliance, Day said the ATO would be embarking on an ongoing quarterly campaign to increase transparency and help businesses “get it right from the start”.
“We will be sharing our areas of focus areas where we are concerned small businesses are getting it wrong, being opportunistic or deliberately operating outside the system on an ongoing basis,” he said.
“We are being transparent and sharing with you early what these concerns are, to give you a runway to address any issues and help your clients get their affairs in order.”
Day said the ATO’s campaign for this quarter would focus on Division 7A issues involving business versus personal income, inappropriate claims of deductions and concessions and shadow economy behaviours.
He said the most common Division 7A mistakes were caused by shareholders or associates failing to understand that a company was a separate legal entity and that owners were not entitled to company money and assets.
“We know many Division 7A dividends arise due to failing to keep private expenses separate from company expenses and failing to keep proper records of these private transactions,” he said.
Another issue that would attract the ATO’s attention was small businesses claiming non-commercial losses due to misunderstanding tax rules, or deliberately making claims for “contrived” losses.
In 2022–23, around 232,000 taxpayers claimed a total of $4.5 billion in non-commercial losses on their tax returns.
Day also singled out shadow economy operators, accounting for 60 per cent of the small business tax gap, with ride-share operators failing to register for GST set to be the “immediate” focus.
He said the ATO would be contacting drivers from February next year where its records indicated tax non-compliance.
“We know too many ride-sourcing drivers are not GST-registered and therefore not paying GST – essentially, they are operating totally outside the tax system.”
Christine Chen
29 November 2024
accountantsdaily.com.au
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Chris Wybenga
B.Bus, CA
Chris is the Managing Director of the Firm who established the practice in August 1994 and has been responsible for its growth and development since that time.
Chris has over 40-years experience in the Chartered Accountancy profession, predominantly spent in small to medium sized firms, advising both small business and individuals in areas such as taxation and accounting as well as business restructuring and superannuation advice.
Chris is active in the development of young accountants both in mentoring cadets at the Firm and lecturing in taxation for the CA Program for the Institute of Chartered Accountants & New Zealand.
- 1980 – Commenced employment and part time university studies
- 1985 – Graduated Bachelor of Business from University of Technology, Sydney
- 1986 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia & New Zealand
- 1988 – Registered as a Registered Company Auditor
- 1994 – Established Wybenga & Partners (formerly known as Farrar & Wybenga)
Dianne Bechara
B.Bus, CA
Dianne is responsible for the day-to-day operations and administration of the practice.
Dianne has over 30-years Chartered Accountancy experience and has significant expertise in providing advice and solutions to high-net-worth individuals and their associated entities. Dianne also has considerable knowledge in the areas of taxation, business services, superannuation, and compliance.
Dianne is active in promoting gender equality in the industry through various programs and mentoring opportunities. Dianne is also committed to the development of young accountants and donates considerable time to sharing her expertise.
- 1992 – Graduated Bachelor of Business from University of Technology, Sydney
- 1993 – Commenced employment in acounting profession
- 1996 – Commenced career with Wybenga & Partners
- 1997 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia & New Zealand
- 2002 – Appointed as Director of Wybenga & Partners
Roger Potter
B.Bus, CA
Roger is responsible for the HR aspect of the Firm, cultivating the culture, and maintaining the highly social environment we pride ourselves on.
Roger has over 35-years in the Chartered Accountancy profession and significant expertise in providing advice and solutions to small businesses and high-net-worth individuals. He also has extensive experience in the areas of Self-Managed Superannuation Funds and retirement strategies.
Roger is active in the development of young accountants both in mentoring cadets at the firm and lecturing in taxation for the CA Program for the Institute of Chartered Accountants & New Zealand.
- 1985 – Commenced employment and part time university studies
- 1990 – Graduated Bachelor of Business from University of Technology, Sydney
- 1992 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia & New Zealand
- 1998 – Commenced career with Wybenga & Partners
- 2002 – Appointed as Director of Wybenga & Partners
Tess Uncle
B.Sc, M.Com, CA
Tess has over 22-years experience in Chartered Firms and in this time has had a broad range of experience in superannuation, taxation, and business services. In particular, Tess has had significant experience in MYOB and assisting clients in day-to-day bookkeeping activities and periodic reporting.
Tess is responsible for the Firm’s training and development needs.
Tess is active in promoting gender equality in the industry through various programs and mentoring opportunities. Tess is also committed to the development of young accountants and donates considerable time to sharing her expertise.
- 2001 – Commenced employment with Wybenga & Partners and part-time accountancy studies
- 2004 – Graduated Masters of Commerce from the University of New South Wales
- 2005 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia & New Zealand
- 2007 – Promoted to Manager at Wybenga & Partners
- 2012 – Appointed as Associate Director
- 2016 – Appointed as Director of Wybenga & Partners
Schedule a Meeting with Tess
Adam Roberts
B.Bus, B.Sc, CA
Adam has over 18-years experience in Chartered Firms and in this time has had a broad range of experience in superannuation, taxation, and business services. In particular, Adam has had significant experience in MYOB and assisting clients with periodic management reporting.
Adam is responsible for the implementation of technology in the Firm and sourcing new areas of innovation and efficiency.
Adam is active in the development of young accountants and donates considerable time to sharing his expertise.
- 2005 – Commenced employment with Wybenga & Partners and part-time Accountancy Studies
- 2005 – Graduated Bachelor of Science from the University of Western Sydney
- 2007 – Graduated Bachelor of Business from the University of Western Sydney
- 2010 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia & New Zealand
- 2010 – Promoted to Manager at Wybenga & Partners
- 2012 – Appointed as Associate Director
- 2016 – Appointed as Director of Wybenga & Partners