ATO Data Matching Pays Off
Nitro Accounting • December 7, 2020
A sub-contractor bricklayer was sentenced to 3 years gaol for lodging 4 quarterly BAS with a total of $85,359 in reported sales despite bank statements revealing deposits of $375,209 leading to a GST shortfall of $26,570.
The taxpayer also understated his income on his tax return, leading to a tax shortfall of $70,441.
The ATO detected the discrepancy in the taxpayer's income and BAS returns by matching sub-contractor information contained in the Taxable Payments Annual Reports (TPAR) supplied by the building industry contractors that the taxpayer contracted with.
The government recently introduced the Single Touch Payroll (STP) reporting system to increase the reporting by business of their payments to employees from annually to soon after each pay run. Over time the ATO will seek to increase the information required.
For payments by business to contractors, the government has used the Taxable Payments Annual Reports (TPAR) supplied by business to monitor certain industries known to be susceptible to cash in hand transactions.
The government has been expanding the scope of industries from IT, building construction and road freight to include courier and cleaning services, that business needs to include in their annual TPAR.
Businesses do not have to be operating in TPAR targeted industries itself to have to lodge annual reports to the ATO. As long as the total of the payments that the business makes with the TPAR targeted industries exceeds 10% of the business' total income they will be required to report.
Due to COVID, many cafes and restaurants now need to lodge an annual TPAR if their payments to food delivery contractors exceeds 10% of total sales.
Please contact us at Nitro Accounting for more details
Plant Operators and Landscapers may be able to claim fuel tax credits on the petrol or diesel expended undertaking off road activities. Fuel tax credits provide you with a credit for the excise included in the price of fuel you use for your eligible business activities. Therefore, the credits received are classified as business income and so need to be included in your tax return. The credits are nearly 43 cents per litre, which can be a significant amount for a typical eligible business. To be eligible to claim fuel tax credits you must be GST registered when you purchase the fuel. You can only claim your credit on your BAS but there are time limits that apply. Generally you must claim within four years from the end of the BAS period the fuel was acquired in. Please contact us at Nitro Accounting for more details
From July 2021, Superannuation Guarantee calculated on your wages paid will be increased from 9.5% to 10%. Superannuation is based upon ordinary time earnings and not overtime, however if any penalty rates apply on your normal ordinary work such as shift allowance then they will be included in the superannuation calculation. The employer is only liable for wages, holiday pay and superannuation when they run the payroll but the liabilities due to specific sections in the tax act are only tax deductible when actually paid. Superannuation will be at 9.5% for payrolls processed up to Wednesday 30th June 2021 and at 10% for payrolls processed after Wednesday 30th June 2021. Subject to future government changes, Superannuation guarantee will continue to increase 0.5% a year for the next 4 years until it reaches 12%. By law, your employer must pay your superannuation by the 28th of the second month after each financial quarter. If your employer pays after this date you will be entitled to extra superannuation. Please contact us at Nitro Accounting for more details
A sub-contractor bricklayer was sentenced to 3 years gaol for lodging 4 quarterly BAS with a total of $85,359 in reported sales despite bank statements revealing deposits of $375,209 leading to a GST shortfall of $26,570.
The taxpayer also understated his income on his tax return, leading to a tax shortfall of $70,441.
The ATO detected the discrepancy in the taxpayer's income and BAS returns by matching sub-contractor information contained in the Taxable Payments Annual Reports (TPAR) supplied by the building industry contractors that the taxpayer contracted with.
The government recently introduced the Single Touch Payroll (STP) reporting system to increase the reporting by business of their payments to employees from annually to soon after each pay run. Over time the ATO will seek to increase the information required.
For payments by business to contractors, the government has used the Taxable Payments Annual Reports (TPAR) supplied by business to monitor certain industries known to be susceptible to cash in
We're living in a sharing economy. Even with Covid-19, people are using sharing services such as AirBnB, Uber, Car Next Door to make some extra money from assets that might otherwise be sitting idle and not being used.
Putting aside the challenges around managing hygiene, it's important to understand risks including; insurance for damage, theft, injury claims, fraud, managing difficult people and the possibility of creating tax problems.
We encourage clients who are considering entering the sharing economy to do their homework and approach it in a business-like fashion. The advantage of seeking our advice early is that you can anticipate and plan for the best path forward to minimise future problems.
For example, Uber drivers need to ensure that their car insurance is endorsed for Uber travel because most policies are for private travel only. AirBnBers have temporary clients but permanent neighbours so to have a sustainable enterprise the management of the respect for neighbours is essential.
The ATO uses a range of sophisticated data matching tools to identify people who earn income from numerous sources including the sharing economy. The sharing economy facilitators such as Uber are all legally obliged to report transactions of all clients to the ATO.
Please contact us at Nitro Accounting for more details
Importance of dealing with any Outstanding Prior Year Tax Returns
In a recent Tribunal case a taxpayer failed to have over $7,000 of fines on his unlodged 2011 and 2012 tax returns reversed despite warning letters going to a wrong address.
When onboarding new clients we notice that sometimes they may have outstanding tax returns from the distant past suddenly appear in their tax records that needs to be dealt with. This has been occurring because the ATO has been centralising its systems more and consequently has exposed a lot of previously overlooked issues.
Some taxpayers are tempted to think that if they have gotten away for it this long then they can keep ignoring it. The ATO has millions of clients so if you have outstanding issues then maybe they haven't gotten to you yet or possibly warnings are going elsewhere.
There are fines for not lodging the actual tax return even if a refund was applicable. There are also additional fines that can be imposed on the tax payable.
resulting from an ATO actioned de
Nitro Accounting is a CPA practice and we prepare tax returns at reasonable prices. Completing rental properties and investment schedules of all types are our specialty.
We can provide a complete service to help you administer your rental properties. Our clients find our online portal and over the phone service very convenient.
Please contact us at Nitro Accounting for more details
From 1st July 2020, the small business tax offset rises from 8% to 13%. This business income can be directly received as a sole trader or distributions from business partnerships and trusts. Small businesses trading as a company will notice the tax rates drop from 27.5% to 26%.
The continued increase in business tax incentives by the current government are more reasons to start and develop your own small business.
To help you determine what trading structure suits your circumstances, please contact us at Nitro Accounting to help you achieve your goals.
Up until this year, your employer had until 14th July to issue you with a payment summary. For most people this won't happen now. Most employers have been subject to Single Touch Payroll (STP) which required them to report your earnings direct to the ATO after each pay day.
Income reported through STP will not be included on Payment Summaries. This may mean most people will no longer be given Payment Summaries. Instead, your Statement of Earnings will appear in your myGov account and your tax agent will be able to download it.
For employers with less than 20 employees they have until 31st July to finalise their STP. Banks will advise the ATO of your interest received later in the year. If you lodge early and the Bank later advises the ATO of a different amount the ATO have threatened to later emend your return.
Please contact us at Nitro Accounting for more information.
Normally you cannot claim a home office unless you have a room set aside and used exclusively by you while you work.
However the ATO recognises that a lot of people working from home have not done so by choice.
This means from March 2020 the home office expense claim rules have been relaxed to include the following;
you do not need a dedicated room and you can work from the kitchen table
COVID-hourly rate @ 80c per hour
The simplified COVID-hourly rate includes all home office running costs such as depreciation, power, internet and phone costs thereby saving all the usual diary usage entries.
The other methods of claiming home office expenses are still available however the usual substantiation is required.
Please contact us at Nitro Accounting for more information.
If you run your own business as a sole trader and your current business turnover has fallen by more than 30% compared to a typical month last year you will be eligible for the $1,500 per fortnight JobKeeper payment.
You can continue to conduct your business and it will be paid monthly in arrears.
We at Nitro Accounting can help you apply for this payment..
