The Australian Tax Office plans to target up to 90,000 small businesses it says are failing to comply with their tax obligations over the next three months.
The is undertaking a “major compliance operation” aimed at small business according to accountants H&R Block.
H&R Block say the ATO is requesting details from 11 major Australian financial institutions, including the ANZ, Commonwealth Bank and American Express, for all credit and debit card payments received by small businesses for the 2014-15 financial year.
As part of the ATO’s data-matching program the tax office will match the credit and debit card payment data provided by the financial institutions against ATO records to identify businesses that may not be meeting their tax obligations.
A spokesperson for H&R Block said in a statement that the crackdown aims to promote voluntary compliance with taxation obligations and will help identify liquidated or de-registered businesses that are continuing to trade.
The ATO also expects the move will assist in identifying ‘cash only’ businesses, by exception.
The new operation follows the tax office’s launch of a social media campaign earlier this year which called for consumers and business owners to dob in businesses suspected of dodging tax bills.
The number of wind-up applications made against small businesses is also soaring.
Previously the tax office has denied the wind-ups were a “crackdown” on small business but many SMEs begged to differ with one SmartCompany reader complaining “big multinationals are raping this country of profits and taxes yet the ATO will go after the small guy who employs a few people and is struggling to survive”.
Lance Cunningham, national tax director at BDO, told SmartCompany the ATO has been undertaking data-matching for some time now.
“The activity is nothing new but the scale of it and sophistication is what’s new,” he says.
“They’ve now got more powerful computers and are undertaking the data-matching more comprehensively.”
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Cunningham says small business owners who have been looking after their tax properly shouldn’t have any problems.
He does not think small business is being targeted rather than big business.
“There may well be larger taxpayers that are avoiding tax but there are smaller tax payers that are avoiding tax as well,” he says.
“The large majority of the tax office’s efforts in terms of reviews and audits is directed at larger taxpayers.
“All taxpayers have to expect the tax office will try to ensure everybody is paying the right amount of tax.”