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ATO small business benchmarks

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In a recent speech, the Commissioner of Taxation discussed the ATO’s use of the small business benchmarks. The Commissioner said ATO statistics indicate that approximately 90% of small businesses in benchmarked industries fall within a benchmark ratio. However, he said around 76,000 businesses have reported income that is significantly below those benchmarks.

To address this issue, Mr D’Ascenzo said the ATO wrote to around 30,000 small businesses regarding the benchmarks in 2010­–2011. He said around 17% (or over 5,000) of the businesses have since started reporting income commensurate with the benchmarks, thereby lowering their risk profile with the ATO. Mr D’Ascenzo said the small business benchmarks, together with other available information, will continue to inform the ATO’s compliance activities.

Other topics discussed by the Commissioner include:

  • Information matching. The Commissioner said the ATO’s information matching program is expected to match over 600 million transactions in the current year (up from 538 million transactions in the 2011–2012 income year).
  • Compliance and prosecution. The Commissioner said in the prior year, the ATO’s compliance activities in the small business sector yielded around $1.97 billion in additional taxes collected. In the last financial year, the Commissioner said the ATO prosecuted 1,430 entities (both individuals and companies) in the small business market for a range of offences including non-lodgment of tax returns and BASs, failure to comply with formal notices for information and making false and misleading statements.
  • Future improvements for small businesses. The Commissioner also outlined some future technological improvements to the interactions of small businesses with the ATO. He said the ATO is aiming to allow small businesses to access and update their obligations online by 2013. Mr D’Ascenzo said the ATO aims to allow small businesses to complete obligations using a mobile device and track their dealings online by 2014. Finally, he said the ATO will aim to have integrated payment services, personalised options and cross-channel authorisation solutions for small businesses by 2015.

Source: Commissioner of Taxation’s speech, “Tailoring our service and assistance for small business”, to the Council of Small Business of Australia at the NAB National Business Summit, Melbourne, 1 August 2012 www.ato.gov.au/corporate/content.aspx?doc=/content/00328141.htm

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