The ATO is cracking down on compliance breaches. Here are some top tips to make sure that your business is on the right side of the law.
Last year the ATO announced the areas in which is will be cracking down on compliance breaches. Here are some top tips to make sure that you're on the right side of the law.
Cash transactions
The ATO will also continue to apply its standard industry benchmarks to taxpayer records in order to identify businesses which are outside the benchmarks.
- Businesses need to make sure they include all cash transactions in their records, and declare them correctly come tax time.
- Business should also review the ATO's industry benchmarks and apply these to their figures.
- If they are outside the ATO's benchmarks, they may not necessarily have a problem, but they should make sure they have good business records to support the reported figures.
Employer obligations
In 2012/13, the ATO will be focusing on businesses that are not meeting PAYG withholding, superannuation guarantee and contractor obligations.
- In relation to PAYG withholding, businesses should download a copy of the latest ATO tax tables and make sure they are withholding the correct amount of tax from employee's wages.
- Businesses must then report and pay the withheld tax to the ATO as part of their normal BAS reporting.
- Finally, employees must be given their PAYG payment summary by July 14 each year, and then lodge a PAYG withholding annual summary statement with the ATO by August 14 each year.
- In relation to superannuation guarantee obligations, employers must pay a superannuation contribution of at least 9 per cent of an employee's ordinary times earnings at least once every quarter. These are due by the 28th day of the month following the end of each quarter (e.g. due October 28 for the July-September quarter).
Contractor arrangements
Contractor arrangements have been a major area of ATO scrutiny for several years now. In particular, the ATO is concerned that businesses may be engaging employees as contractors to avoid superannuation obligations, payroll tax and workers compensation obligations. As shown over the years, if a contractor is in fact an employee, then the employer will be liable to pay any outstanding obligations once they are discovered, with severe penalties attached.
- Businesses engaging with contractors need to be aware of the difference between an employee and a contractor, and make sure that their contractors are true contractors to avoid being stung later.
Advice provided by RSM Bird Cameron.
