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Media release
February 2011
2011 means fresh targets for the ATO
A fresh warning has been issued to all small businesses by the ATO with the introduction of new cash sale benchmarks as part of a recent, but ongoing, crackdown on Australia’s cash economy.
The benchmarks currently apply to 15 industries including cafes, pubs, hairdressers, florists, general stores, beauticians and hardware and building supplies with more likely to be added in coming months.
New technologies now enable the ATO to look more closely at any companies deviating from its benchmarks by cross-matching data from banks, insurance providers, trade suppliers and other government agencies.
“The ATO have been trying to crack down on lost revenue from ‘under the table’ payments forever,” said Christian Borkowski, CEO of Chatswood-based, ThePrimeAdvisoryGroup. “Now though, new technology means if any company’s results are outside the standard industry benchmarks, it will gain the ATO’s attention. Claims of ‘that’s just the way my business is’ won’t cut the mustard. In a way, it’s rather like being guilty until proven innocent.”
The new cash sales benchmarks are broken down by industry, annual business turnover and average sales value. For example, if a local hairdresser declares their business turnover of $350,000 is mainly taken by credit card or EFTPOS, the benchmark assumes another $100,000 or so was also taken in cash, cheques or bank transfers and the ATO will look for a solid explanation or payment of outstanding taxes.
“Whilst the ATO accepts there may be genuine reasons for a business being outside its industry benchmarks, the best way forward, for any business the ATO has taken an interest in, is to be able demonstrate quickly, easily and with pinpoint accuracy, the reasons for the variation,” Borkowski said. “That’s not likely to be something many business owners can do without the aid of an experienced adviser.”
What can businesses do?
- Keep organised, accurate and complete records – poor record keeping is an ATO red flag.
- Use adequate accounting software
- Conduct regular reconciliations of sales and banking records, against the business’ profit and loss and BAS statements
- Partner with your accountant to set up a tailored approach that factors in your particular business’ financial reporting needs
Ensuring the above, both minimises the likelihood of interruption to your business should the ATO come to call, and also give vital insights on how a business is performing overall.
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ThePrimeAdvisoryGroup is a proactive fully integrated financial services firm providing individuals, like you, with the assistance you require to manage both your business and personal finances. Not only can we provide you with all necessary services to comply with the ATO requirements, but we can help you grow your business and become more profitable.
By keeping you ontrack, you can achieve your goals.
Unlike many other firms in the sector, ThePrimeAdvisoryGroup doesn't consider itself to have clients - it has fans! A whopping 85% of its customer base said they'd be delighted to act as TPAG referral ambassador in a recent survey.
For further information please contact Kristin Austin - KAT&C 0415 547 529
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