As part of the ATO’s campaign against businesses operating in the cash economy, the ATO is visiting businesses that predominantly make cash sales (e.g. restaurants, cafes, hair and beauty salons).
The ATO are also identifying businesses for a visit where the business:
- fails to register for GST, lodge activity statements or tax returns;
- fails to meet superannuation or employer obligations;
- operates outside the normal small business benchmarks for their industry; or
- if the business is reported by the community for potential tax evasion.
The ATO also makes extensive use of data matching (e.g. determining under-reporting of income by comparing data from 3rd parties) to identify when such cash sales are not declared.
Penalties can be significantly reduced by making a voluntary disclosure to the ATO and in that event, the ATO is more amenable to arranging a debt repayment plan. The ATO is definitely less amenable to payment plans if avoided tax is discovered during the course of an audit.
If you are deriving cash income from business activities, please contact us so that we can help you comply with your tax and GST obligations.
GST registration for non-residents (digital products)
From 1 July 2017, overseas businesses with an annual turnover of $75,000 that supply services (e.g. architectural or legal services) or digital products (e.g. streaming or downloading of movies, music, apps, games and e-books) to Australian consumers (e.g. individuals not registered for GST) will have to register for Australian GST.
Overseas businesses can choose to register for GST by using a simplified method (i.e. where there are no proof of identity requirements but such businesses cannot claim input tax credits) as opposed to the full registration method (i.e. where there are strict proof of identity requirements but such businesses can claim input tax credits).
If you are acting as an Australian agent for such an overseas business making digital sales in Australia, we can assist the foreign business to register for Australian GST.
Some superannuation issues to consider
As mentioned in previous Top Tax Tips, major superannuation changes commence on 1 July 2017. We recommend that you speak to your superannuation adviser as soon as possible about the effect these changes may have on your financial position.
Some issues to discuss may include:
- Possibility to take advantage of the higher contributions caps pre 1 July 2017;
- Consider whether salary sacrifice arrangements are still beneficial;
- Reducing pensions to comply with the $1.6 million pension transfer balance cap;
- Review of transition to retirement income streams (TRIS); and
- Review of CGT cost bases of assets and whether CGT elections should be made.