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Oct 11, 2017 / News

Business Consulting / Taxation

Top Tax Tips - 11 October 2017

What to do when the ATO contacts you  

If you are contacted by the ATO, you are within your rights to advise the ATO officer that Nexia Edwards Marshall is your tax agent and that you would prefer their assistance with any responses to the ATO.  Successive Court decisions have authorised this approach provided the response to the ATO is undertaken with a reasonable timeframe, usually within 14 days – this can be extended in appropriate circumstances.

Please also be wary of people claiming to be from the ATO and making enquiries about your business or your employees.  Unless the person can present a valid ATO authority (called a warrant card), no responses should be given to the person who could be anyone from a private investigator, family lawyer or general fraudster. 

Determining whether the person is an ATO officer is even more difficult when the alleged ATO person is making enquiries over the telephone.  Your first line of defence is to ask the person to contact your Nexia Edwards Marshall advisor regardless of how urgent the purported ATO person says their enquiry is.  Such demands are usually a “try-on”.   Further, a legitimate ATO officer is usually pleased to advise you of the ATO general switchboard telephone number to ring and the relevant officer’s extension number – we recommend that you give that number to your Nexia Edwards Marshall advisor in order for them to contact the ATO officer.

SMSF audits: If it’s too cheap, it’s probably more trouble than it’s worth

A number of our Nexia Edwards Marshall clients have received cold calls from various so-called “SMSF audit specialists” offering entire SMSF compliance and audit services for as little as $990.  Another supposedly fantastic offer includes being able to do a paperless SMSF audit for as little as $300 within 4 business days.

Preparing the financial accounts, having them audited and preparing an SMSF’s income tax return requires a thorough knowledge of our complex income tax and superannuation laws.  All entries on the accounts and tax returns must be accurate otherwise the SMSF may be at risk of an ATO audit that may discover incorrect treatment of tax free and taxable amounts payable by the SMSF on the retirement or death of a member.

Preparing incorrect accounts and tax returns may cause the SMSF to become non-compliant – giving rise to the SMSF paying tax at 45% of its income and on its assets in the year of non-compliance.  Such a high rate of tax will result in a very significant depletion of the SMSF’s assets – therefore SMSFs must be accurate in their reporting and operations.   

We remind our clients to be vigilant of deals that seem too good to be true.  Fortunately, the ATO is investigating the low-fee offers because the ATO is well aware of the work involved in preparing accurate accounts and tax returns for SMSFs.   Your Nexia Edwards Marshall advisor is always pleased to assist you with any enquiries regarding your SMSF, the pros and cons of having an SMSF and maximising benefits under our tax and superannuation laws.  

ATO focus on the cash economy

As part of their campaign against businesses operating in the cash economy, the ATO is visiting businesses that predominantly make cash sales (e.g. restaurants, cafes, hair and beauty salons, building and construction industries).

Other factors that may prompt such an ATO visit include businesses identified because they:

  • fail to register for GST or lodge activity statements or tax returns;
  • fail to meet superannuation or employer obligations;
  • operate outside the normal small business benchmarks for their industry; or
  • have been reported by the community for potential tax evasion.

The ATO also makes extensive use of data matching which can determine whether income is being under-reported by comparing data from 3rd parties.

Penalties can be significantly reduced by making a voluntary disclosure to the ATO of any unreported income.  In that event, the ATO is more amenable to arranging a debt repayment plan.  The ATO is definitely less amenable if avoided tax is discovered during the course of an audit.    

If you are deriving cash income from any business activities, please contact us so that we can help you comply with your tax and GST registrations, reporting, lodgement and payment obligations

How can Nexia Edwards Marshall help you?

For any questions or to discuss any of the above in relation to your personal situation, please contact Grantley Stevens or your Nexia Edwards Marshall Advisor.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Advisor.