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The Australian Taxation Office (ATO) has announced the property and construction industry as its small business focus area for the current quarter.
The ATO’s focus on property and construction recognises both the industry’s significant contribution to Australia’s economy and the prevalence of mistakes, misunderstanding and deliberate evasion of tax law by industry participants.
In a recent communication, the ATO put advisors on notice that it will be seeking to address the following ‘recurring issues’ that have been observed across the industry:
- Omitted income, including:
- failing to report income, whether received as cash or otherwise;
- incorrectly classifying income from property development; and
- contractors omitting income reported to the ATO through the Taxable Payments Reporting System.
- Overclaiming expenses and GST credits.
- Incorrectly represents expenses that are private in nature as business-related, or not correctly apportioning such expenses to account for business and personal use.
- Not registering for GST when required.
- Using business assets and funds to support personal lifestyles, tax-free.
Small business taxpayers within the property and construction industry are reminded of the significant penalties that can attach to the making of false or misleading statements (these can exceed the tax shortfall amount), that criminal penalties may apply under either the Taxation Administration Act 1953 or the Criminal Code Act 1995 where certain egregious behaviours are identified, of the punitive character of ATO interest charges following a recent legislative amendment that denies the deductibility thereof, and that concessions such as penalty remission may be available where a voluntary disclosure is made to the ATO.
Please contact your local RSM Advisor if you would like to discuss your circumstances.
