We have received several visits from the Australian Tax Office informing us that they are continuing a systematic audit of salon businesses to determine their practices in light of the perception that often cash transactions are not declared to the Tax Officer.
The “cash and hidden economy” is reported to be still very active in Australia with over 1.6 million small businesses operating across 234 cash exposed industries. The ATO indicated that they have observed a high incidence of cash transaction risk factors across every state. They have been conducting location specific visits where and they identified high incidences of cash economy risk factors across all states.
In 2016-17, seven out of every 10 of the 11,000 audits carried out by the ATO resulted in an adjustment being made, with total liabilities of $197 million in tax and penalties assessed. In the first six months of 2017-2018, the ATO conducted 5020 reviews and audits resulting in approximately $143 million in tax and penalties.
This year the ATO is continuing their investigations also of salons and are specifically looking at the following areas of non-compliance:
- Failure to register for GST or lodging Business Activity Statements or tax returns
- Businesses who have a cash incentive payment option
- Businesses that the ATO data matching suggest they don’t take electronic payment
- Indicate unrealistic income relative to the assets and lifestyle o the business and its owners
- Failure to meet with their superannuation or employer obligations
- Are reported to the ATO by the community on potential tax evasion
- Their figures do not agree with the ATO benchmark for that industry
If you are unaware of your obligations and would like some independent advice please phone APAN for assistance. It pays to be compliant as there are heavy fines for tax avoidance.