Is the ATO about to clamp down on small business compliance?

Small business compliance is a tricky subject, but the financial penalties can be severe if figures are consistently wrong.

The Australian Tax Office (ATO) will be well known to small business owners across the country. It is the government's unit for compliance and ensures that enterprise figureheads are doing all they can to meet taxation requirements.

Naturally, the ATO doesn't discriminate between big corporations and companies with only a handful of employees. However, the ATO could be set to clamp down on small businesses who have fallen short in their tax accounting.

Increasing taxation transparency

In fact, around 90,000 small business owners could come under scrutiny as the ATO looks to encourage more taxation transparency across Australia. Ultimately, the auditing process may not find anything untoward in the vast majority of companies, but it's a case of cross-referencing existing data with anything that may have changed since the ATO last carried out such an endeavour.

The ATO is set to assess the data submitted by small business owners to ensure that their accounts and financial information have been reported accurately. This will include the matching of business activity statements and income tax returns in efforts to reaffirm that the figures processed through an organisation's credit and debit card payment facilities are correct. 

In essence, the ATO will be doing its best to identify any under-reported income or errors in the documenting of expenses.

Grasping small business compliance

As touched on, the vast majority of companies will have little to worry about in terms of penalties from the ATO. However, compliance – especially from the perspective of small business owners – can be a tough subject to grasp at times.

Those having trouble should consult with professional accounting services to see what the options are. After all, while only the most severe cases are the ones that call for penalties, the financial fallout can be relatively significant.

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