Phone: (03) 9563 4688

Email: office@aubreypaton.com.au

Address: 17D Chester Street, Oakleigh VIC 3166

Latest Accounting News
Hot Issues
300,000 SMEs utilising $20K write-off, says ATO
‘A bad thing times 10’: ATO set for new SMSF blitz
Capital Gains and Renounceable Rights
Paperwork bungles lead to $38k in payments
Australian Dietary Guidelines and healthy eating chart (PDF)
Former director liable for company’s unpaid tax liabilities
Resources on our site to help you, your family and your friends.
Super for housing measures enter Senate
No Special Circumstances to allow Excess Super Contributions
Housing tax measures progress to Parliament
AirBnb – wrong tax outcome?
Are young investors wasting their youth?
ATO sending 'more letters than ever' on income tax errors
Powerful Budgeting, cash flow and Super Tools available on our site.
Property, unit trusts in ATO's sights
Australian Dietary Guidelines and healthy eating chart (PDF)
Major Bank Levy Passed
NSW tops list as ATO reveals billions in lost super
How is your super going, ready for retirement?
Australia's leading causes of death - ABS
ATO increasing data exchange with international regulators
Illegal SMSF early access scheme leads to $6,000 fine
Our 'hardest' SMSF tasks
Uber drivers hit for 10% tax
Lack of literacy promotes unrealistic goals
Taxpayer failed to prove that payments were “loans”
New STP dates confirmed as ATO goes on compliance blitz
ATO flags compliance project for FY17/18
Items that heat up your depreciation deductions
Doing a budget is a good idea but ....
Articles archive
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 4 October - December 2007
Quarter 2 April - June 2007
Quarter 1 January - March 2007
Quarter 2 April - June 2006
Quarter 1 January - March 2006
Quarter 4 October - December 2005
Quarter 3 July - September 2005
Quarter 2 of 2011
Articles
When to put tax schemes to the test
Scrutiny on Takings
Benchmarking and Australian Taxation Office (ATO) Aggressive Approach
SMSF Member Verification System Made Easier
May 2011 Newsletter
April 2011 Newsletter
Federal Budget 2011-12.    At a Glance
Federal Budget 2011-12.   Overview
Outstanding Tax returns - Some Years?
Tax advice privilege for Accountants a possibility
Egg on Face? - Benchmark by Australian Taxation Office (ATO) Withdrawn
March 2011 Newsletter
Benchmarking and Australian Taxation Office (ATO) Aggressive Approach

The ATO have conducted aggressive action against many small businesses.


Over 100,000 letters have been sent to taxpayers whose profitability does not meet ATO industry benchmarks.  The presumption is if gross profit is less than others in the industry, then that will be as a result of cash income that has not been disclosed.

The only apparent defence is demonstrably good records.  It would not seem to matter whether you are different to others in your designated industry and if the business is struggling for profitability and therefore its administrative effort is not as good as another, it could pay a double penalty.  The ATO can determine the likely assessable income and issue an amended assessment.

There are already some very angry and very disillusioned taxpayers who feel aggrieved that they have been arbitrarily penalised.  It will be some years before the courts make decisions on the legalities of the ATO approach, but neither the courts or the government are likely to have too much sympathy for a struggling business.

It is a relatively easy exercise for the Tax Office to accept the declared purchases and in turn the cost of sales and thereafter predict a normal turnover.  A fundamental flaw in this philosophy is that is impossible for everybody to be the average, but those are below will be targeted.

Profitability varies for a vast number of reasons between businesses and year by year.  Reviewing your classification and then examining your own benchmark, is an important first step.

Demonstrably good records are highly subjective terms, which will be difficult for a junior tax office auditor who has never know the tough world of small business, to even begin to understand.  Businesses that deal in cash are going to be subject to some very difficult times.

Has the presumption of innocent has been abandoned?  Future relationships with the Tax Office may be quite confrontational!

 



7th-June-2011