With the impact the pandemic has had on businesses locally as well as globally, governments, including the Australian government, have been making concessions to business to help soften the blow. However, as the vaccine rollout continues, governments are now increasingly looking to try and get back to business as normal. This includes ensuring companies are up to date with their taxes.
At the height of COVID-19, many compliance activities were deferred as businesses struggle to cope with the impact. However, after a recent tax gap report that shows a $772 million, 7.7% tax gap, the Australian Tax Office (ATO) is set to return its focus on previously deferred activities. Arnold Bloch Leibler partner Jonathan Ortner has warned that auditing efforts will be stepped up again by the ATO and their priority will be larger, wealthier businesses. Mr Ortner also suggested this could happen in the coming months as the ATO will take their time over the issue.
Those that are likely to find themselves in the ATOs sights at first are those in the top 500 and next 5,000 programs – both of which were programs devised to help give the overall community assurance that the largest and wealthiest business were paying their taxes. With a visible light at the end of the tunnel where the pandemic is concerned, businesses need to know that they are still liable for the tax they owe.
Mt. Ortner believes that wealthy groups and privately owned companies worth more than $10 million are also likely to be looked at by the ATO. This includes subsidiaries associated with these companies.
The move comes partly due to increased funding into the tax avoidance task force that gives them more resources to take a closer look at these companies. They aim to claw back revenue that has otherwise been lost since the pandemic led to deferrals of activities.
Ortner also believes that the companies less affected by the pandemic are likely to be at the top of the list – giving those most affected more time to prepare. It is advised that any businesses ensure they are up to date and ready to demonstrate that they are paying their taxes when it is their turn to be the subject of an audit. If they are not up to date then there is still time for them to get prepared and it is better to start doing so sooner rather than later.