Following the introduction of SuperStream on 1 July 2015, the ATO have now rolled out Single Touch Payroll (STP) for all employers, regardless of size, from 1 July 2019. Whilst this places an increased burden on compliance, particularly for very small businesses, many in the industry are more concerned about the information the ATO now holds, and what they plan to do with it.
As an example, the ATO now have access to both the detailed payroll records of an employee (via STP) and the detailed superannuation payment records (via SuperStream) in real time. If an employer fails to pay an employee’s superannuation contribution by the due date, i.e. 28 days after the end of the quarter, the ATO will be able to put the pieces of the jigsaw together and potentially unilaterally issue Superannuation Guarantee Charge Notices to the employer without prior warning, where previously these breaches were self-reported.
As directors of companies are now personally liable for unpaid superannuation, all employers should take a more proactive approach to ensuring their employee entitlements are met.
In addition to the above, from 1 July 2019 the ATO have issued guidance around the benchmarking of financial data for small businesses, comparing the figures on lodged tax returns against the average figures for other businesses with the same ANZSIC codes. In practice this is likely to mean an increased focus on auditing those businesses who fall outside of those benchmarked figures, whether the reason is nefarious, or wholly innocent.
Finally, for the 2019 year and on, personal tax returns now contain far more information than previously, including full breakdowns of every deduction claimed along with the narrative descriptions entered by the preparer. The ATO have warned that they will be looking into certain claims this year, in particular:
- Motor vehicle claims of exactly $3,400 (i.e. 5,000km at the rate of 68c/km)
- 100% business use claims, such as for mobile phones
- Unsubstantiated expenses, such as $150 for laundry or $300 for other work related deductions without receipts
- Rental expenses that don’t relate to the actual property being rented – for example interest on a loan relating to a different property
In order to avoid inviting suspicion and increasing the likelihood of an audit, taxpayers should do the following:
- Make sure all employee entitlements are paid by the due dates
- Ensure that the ANZSIC code used on their tax return is correct, and appropriate for their business
- Check their financial figures are within the benchmarking parameters set out by the ATO; if not, why not? Is there a reason, or is there an error in the data?
- Ensure all receipts are kept, and only those expenses that can be justified are included on their tax returns
Whilst Hoffman Kelly will perform some of these checks on final tax returns prior to lodgement, it doesn’t hurt for taxpayers to be aware of these changes and start to think about what information they would be able to provide the ATO in the event of an audit.
Remember – Big Brother is watching…