The ATO annual compliance program serves as a fair warning to all taxpayers, CPA Australia has said.

CPA Australia CEO Geoff Rankin said the ATO’s 2008 – 2009 compliance crackdown gave taxpayers, especially individuals and smaller enterprises, ample time and information to ensure their tax affairs were in order.

‘The program acknowledges the complexity and scope of the Australian tax system while aiming to ensure that all taxable entities are compliant,’ he said.

‘The system’s complexity is such that 73 per cent of individuals and 95 per cent of businesses now see a registered tax agent.

The compliance program is a timely reminder for businesses and individuals to speak to a qualified CPA tax agent where necessary to ensure their affairs are in order.
‘The compliance program’s approach which emphasises education, information and transparency as opposed to being purely punitive is a positive step. Nevertheless the program will utilise the technology and resources available to the ATO to ensure compliance and collect tax revenue due.’

Mr Rankin said the focus on smaller enterprises, ‘mum and dad’ investors, international transactions and individuals, meant reviewing and modifying behaviour where necessary was crucial.

‘Individuals, smaller enterprises and smaller investors, including those with offshore transactions, must take care in ensuring their affairs are in order. The complexity of some of these affected transactions means some taxation requirements may sometimes be overlooked but the need to be thorough, from a compliance viewpoint, has never been greater.’

The annual compliance program will focus on the following areas among others:

* investors (undisclosed capital gains including gains from disposing of assets to invest in superannuation)
* international transactions (using technology and agreements with international authorities to verify tax compliance of international transactions)

  • undeclared income (particular emphasis on partners and beneficiaries who have not returned their share of partnership or trust income)
  • work related expenses (focus on occupations with a pattern of rising claims)
  • cash economy (ATO will contact 50,000 businesses to inquire about their cash economy activity and conduct 5000 reviews)
  • rental property deductions (under-reporting of rental income and over reporting of deductions

‘The increasing use of sophisticated technology allows the ATO increased access to data and a greater capacity for data matching to determine compliance for a wide range of transactions. In 2007 – 2008 the ATO received around 78 million income records to ensure assessable income was correctly returned,’ Mr Rankin said.

‘While individuals and entities are being given every opportunity to comply, the penalties for non-compliance are high so if unclear as to your status speak to a CPA