Tax

Fast Lane: small business keeps on getting screwed on tax

Cara Waters /

Have you noticed there is one set of rules for small business and another set entirely for big businesses?

Last week, the Australian Tax Office announced it was establishing a unit to deal exclusively with at least one million of Australia’s biggest privately owned businesses and wealthy individuals.

These individuals with net assets of over $5 million will be personally contacted by the ATO.

About 30,000 privately owned groups including wealthy individuals “with a low level of risk” will be informed that previous income tax statements will not be subject to further investigation by the ATO. How understanding of the Tax Office.

But if you run an SME don’t expect any tax breaks: the company loss carry-back measure is no longer. You can also expect the ATO to run through your tax return with a fine tooth comb.

Small and micro businesses cop the majority of the fines from the ATO, while the tax office appears helpless in the face of tax avoidance by big multinationals.  

And if there is an issue, don’t expect the ATO to show leniency. A report released earlier this month by the Inspector-General of Taxation Ali Noroozi shows the ATO is more likely to listen to tax disputes with big businesses and leave small businesses to foot their full tax bill.

Meanwhile, the government is moving to exempt around 700 private businesses from tax disclosure laws amid concerns business leaders could become kidnapping targets if members of the public found out how wealthy they are.

Has the government not heard of handy guides to wealth known as the BRW Rich List and Forbes’ richest people list?

University of NSW accounting lecturer Jeffrey Knapp, an expert in financial reporting policy and practice said the move to exempt rich-listers from disclosure was “laughable” and “the stupidest excuse for non-disclosure I’ve ever heard”.

“This change is consistent with a pattern of behavior of giving favour to high-wealth Australian individuals with proprietary companies,” he said.

It’s a pattern of behavior that continues across government departments. It’s easier to go after the little guys, so SMEs continue to cop it.

And while a dispute with the ATO or an imposed penalty may be a drop in the ocean for a big business, for a small business it can be make or break.

SMEs often can’t afford the time or money it takes to challenge a decision and so just have to wear it.

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Cara Waters

Cara Waters is the former editor of SmartCompany. Previously, Cara was a senior reporter at the Financial Times website FT Adviser in London and she also worked for The Sunday Times in London.

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