The Australian Taxation Office (ATO) has expanded its data matching program to detect businesses operating in the cash economy, particularly in industries where cash payments are common practice.
The new program will use data from a variety of sources including credit cards and eftpos sales. Once the agency has this information it is compared to the taxpayer's information and the ATO's small business benchmarks (based on a picture of labour, rent and sales costs) to identify businesses that may not have reported all of their income.
If a small business is identified as being likely to under report income the ATO may request that proprietors make voluntary disclosures. The business also runs the risk of facing penalties as well as paying unpaid tax liabilities.
After easing back on small business tax liabilities in the midst of the GFC this move represents a return to firmer policies of compliance for small businesses. According to ATO Commissioner Michael D'Ascenzo ATO staff have visited over 5000 small businesses this year to verify tax compliance, with another 4000 visits expected by the end of June.
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