No one enjoys the idea of an Australian Taxation Office (ATO) audit — but it’s a reality that individuals, investors, and business owners should understand and prepare for. The good news is that most ATO audits are triggered for specific reasons. With accurate reporting and open communication with your accountant, you can reduce the risk — and the stress — of an ATO review.

How often does the ATO conduct audits?

While not every taxpayer will face an audit, the ATO conducts thousands of reviews and audits every year across Australia. These are often targeted at industries or activities where discrepancies are more common, such as:

• Cash-based businesses (cafés, salons, trades, hospitality).
• High-value property or capital gains transactions.
• Unusually large deductions or expenses compared to similar taxpayers.

With increasingly sophisticated data-matching technology, the ATO automatically cross-checks information from banks, employers, superannuation funds, land titles offices and even digital platforms like Airbnb, Uber and eBay. If something doesn’t match what you’ve lodged, the ATO can quickly flag it for review.

Who might be audited by the ATO?

The ATO uses data analytics to identify potential red flags in tax returns and BAS statements. Common audit triggers include:

• Income that doesn’t match employer, bank or third-party data.
• Deductions that are unusually high for your occupation or industry.
• Sudden changes in income or expenses without a clear explanation.
• Failure to lodge tax returns or BAS on time.
• Being involved in arrangements that appear to artificially reduce tax.

Even when your records are accurate, you can still be selected for a random review — which is why keeping your documentation up to date is so important.

Why full disclosure to your accountant matters

Your accountant can only prepare accurate and compliant returns based on the information you provide. If income, expenses, assets or business activities are withheld, forgotten or misrepresented — even unintentionally — the risk of an issue during an ATO audit increases.

It’s also worth noting that your accountant generally cannot be held responsible for errors or penalties that arise because the information supplied by the client was incomplete or incorrect.

By being fully transparent, you allow your accountant to:

• Ensure your returns comply with current tax law.
• Claim all legitimate deductions — but not the risky ones.
• Prepare supporting documentation in advance.
• Defend your position more effectively if the ATO asks questions.

At Holmans, we always encourage clients to tell us everything upfront — prevention is far cheaper than responding to an audit.

The real cost of an ATO audit

An audit isn’t just inconvenient — it can be costly. Depending on the scope of the review, you may face:

• Professional fees for responding to ATO queries.
• Time spent locating and providing records.
• Interest and penalties if tax has been underpaid.
• Repayments that can stretch back several years.

Because of this, some businesses and high-risk industries choose to take out audit insurance to cover the professional costs of dealing with an ATO review. If you’re unsure whether this is appropriate for you, speak with us and we can outline the pros and cons.

How to stay on the safe side

You can’t completely remove the possibility of an audit, but you can make yourself far less likely to be targeted — and far easier to defend — by following some good practices:

• Keep thorough records — invoices, receipts, bank statements, logbooks.
• Lodge on time — late lodgements are a simple audit trigger.
• Be consistent from year to year, especially with deductions.
• Ask before you claim — get advice before making unusual or large claims.
• Respond to ATO correspondence quickly — never ignore a letter.

Good record-keeping plus an active relationship with your accountant is still the best defence.

Need help reducing your audit risk?

An ATO audit doesn’t have to be a nightmare. With transparency, solid documentation, and the right advice, you can get through it — or better still, avoid it.

Holmans helps clients across the Sunshine Coast and throughout Australia to stay compliant, minimise audit risk and understand exactly what the ATO is looking for.

Contact Holmans today to talk about ATO audit risk, audit insurance, or tax compliance for your business.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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ATO Targets Tradies and Professional Services

The Australian Taxation Office (ATO) has flagged the construction industry and the professional services sector for closer review. Here’s what small businesses should know.

Industries Under the Microscope

• Construction and professional services
  These sectors (tradespersons and professional services such as engineers, consultants, and accountants) are seeing recurring compliance issues with reporting and record keeping.

Common Tax Issues

• Incorrect income reporting
  Omitting sales or under-declaring income in BAS and tax returns remains a frequent error.
• Overclaimed expenses
  Private or personal costs are being claimed as business deductions when they shouldn’t be.
• GST mistakes
  Businesses are missing GST registration when required, or overclaiming GST credits.
• R&D Tax Incentive (R&DTI) errors
  Claims are being made for activities that don’t meet eligibility criteria or lack proper documentation.

Key ATO Warnings

• Closer monitoring
  The ATO is watching closely and will apply penalties and interest where errors are found.
• Amendments and audits
  You may be asked to amend returns or face an audit if reporting doesn’t align with records.
• Seek help early
  If you’re struggling to meet obligations, get assistance from a registered tax agent, a business adviser, or the ATO.

What the ATO Expects

• Report all business income
  Ensure no jobs, invoices, or deposits are left out of BAS and tax returns.
• Claim only legitimate business expenses
  Keep personal and business costs separate and substantiate deductions.
• Maintain complete records
  Keep full and accurate documentation, especially for R&D activities and expenses.
• Register for GST when required
  Register once your turnover exceeds the $75,000 threshold (or earlier if applicable).

Small Business Growth and Complexity

• Obligations increase as you grow
  Tax and super become more complex, particularly for businesses with $1 million–$10 million turnover.
• Accuracy matters
  Take extra care with income, deductions and offsets as your operations expand.

In Short

• Now is the time to review
  Double-check your reporting, record keeping and R&D claims—the ATO is paying attention, and strong documentation is your best defence.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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ATO payday super SBSCH closure 2026 – what employers need to know

The ATO payday super SBSCH closure 2026 is approaching. Small businesses that use the Small Business Superannuation Clearing House (SBSCH) should prepare now. The free service ends on 1 July 2026. In addition, new registrations close on 1 October 2025.

The SBSCH lets employers make one quarterly super payment, and it then distributes funds to each employee’s super fund. However, payday super will align contributions with wages. As a result, payments will be more frequent and the SBSCH model will no longer fit.

Why the SBSCH is closing

Payday super aims to reduce unpaid and late super. Therefore, employers will be required to pay super at the same time as wages. This shift moves SG from quarterly batching to pay-cycle payments. Consequently, the SBSCH becomes redundant, and the ATO payday super SBSCH closure 2026 will take effect.

What changes on 1 July 2026

• Employers will have seven days after each payday to ensure SG contributions reach the nominated super fund.
• Quarterly batching through the SBSCH will cease. This means super payments will be tied directly to pay runs.
• Payments will move into payroll software, commercial clearing houses, or services offered by super funds. As a result, payroll systems will become central to SG compliance.

Industry concerns and timing

Many support the reform because it can improve retirement outcomes. Even so, business and accounting groups have raised timing issues. Weekends, public holidays, and clearing house processing may tighten the seven-day window. For this reason, some suggest a phased approach to help small businesses adapt before the full effect of the ATO payday super SBSCH closure 2026. In contrast, superannuation industry groups argue the sooner it starts, the sooner employees benefit.

How to prepare now

• Review your current SG workflow and note what must change when payday super starts. This step ensures you can act early rather than rush at the deadline.
• Confirm your payroll software can calculate and pay SG each pay run, and check how it remits to funds. Many software packages will still be working on their solution at the moment.
• Compare commercial clearing houses and super fund payment services for cost, integration, and processing times. Choose the most efficient option for your business.
• Closer to the effective time, update payroll calendars, cut-off times, and approvals so contributions are initiated within seven days. In addition, factor in public holidays and weekends when scheduling pay runs. Holmans would recommend payment on the same day as wages with little or no delay.
• Brief your payroll team and bookkeeper. Also, update procedures, checklists, and reminder tasks to reinforce the new requirements.
• Monitor cash flow carefully. Since you will be paying per pay cycle rather than quarterly, this will change the timing of outgoings.

Key dates at a glance

• 1 October 2025: New registrations for the SBSCH close. Therefore, no new users will be able to access the system from this date.
• 1 July 2026: SBSCH closes and payday super begins. Consequently, SG must be paid within seven days of each payday.

Need help with compliance and setup?

The ATO payday super SBSCH closure 2026 will arrive faster than you think. Don’t wait until the deadline to find out your systems aren’t ready. Of course, our team at Holmans can guide you through every step — from planning your transition and configuring payroll software to implementing efficient, compliant payment workflows. Contact us today to ensure your business is ready to meet the new superannuation guarantee obligations from day one.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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Maximising Rental Property Deductions:
What You Can (and Can’t) Claim

Owning a rental property can be a great way to build wealth, but it also comes with a range of tax responsibilities. As a landlord, understanding what you can and can’t claim as a deduction is key to maximising your return while staying on the right side of the ATO.

The Australian Taxation Office (ATO) has clear guidelines around rental income and allowable deductions. Here’s what you need to know.

Declare All Rental Income

Before diving into deductions, it’s important to understand that all rental-related income must be declared. This includes:

• Rent received from tenants
• Rental bond money retained (e.g. for damage or unpaid rent)
• Insurance payouts related to the rental
• Reimbursements for expenses (like water or electricity)
• Government rebates or grants
• Income from short-term rental platforms (such as Airbnb or Stayz)

Whether you’re renting out a property long-term or casually letting it during holidays, income must be reported in your tax return for the year it was received.

What Can You Claim as a Deduction?

Here are some of the most common deductible expenses landlords can claim:

1. Interest on Loans – You can claim the portion of interest paid on your loan used to purchase, renovate, or maintain the property (but not the principal).
2. Council Rates and Water Charges – If you pay these costs as the landlord, they are deductible.
3. Repairs and Maintenance – Costs for fixing damage or wear and tear from tenants are deductible. However, improvements or renovations are treated differently.
4. Property Management Fees – Including agent commissions, advertising for tenants, and legal expenses related to leases.
5. Depreciation – On eligible assets like appliances, carpets, and hot water systems, using a quantity surveyor’s depreciation schedule.
6. Insurance Premiums – Including building, contents, and landlord insurance.
7. Travel Costs – If you incur travel costs for inspections or maintenance, these are no longer deductible for most individuals from 1 July 2017 (with some exceptions for corporate landlords).
8. Pest Control, Cleaning, and Gardening – Necessary upkeep expenses can be claimed, provided they are directly related to the property’s rental.

Be Careful with Capital Works and Improvements

It’s important to distinguish between repairs and capital improvements. While repairs can be claimed immediately, improvements—like replacing a kitchen or adding a deck—must be claimed over several years through capital works deductions. This is a common area where landlords get tripped up.

Part-Year or Private Use? Adjust Accordingly

If the property was only rented for part of the year or used personally at any time, you can only claim deductions for the portion of the expenses that relate to the rental period. Likewise, if you rent out part of your home (e.g. a room or granny flat), you must apportion expenses fairly.

Keep Records

To back up your claims, keep detailed records of all income, expenses, contracts, and receipts. The ATO requires records to be kept for at least five years, and being able to substantiate claims is crucial in the event of an audit.

By understanding your obligations and entitlements, you can make your investment work harder for you—both at tax time and over the long term.

Speak to your accountant to ensure your rental property deductions are accurate, compliant, and fully optimised.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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The Australian Taxation Office (ATO) is cautioning taxpayers to be vigilant against deceptive tax schemes circulating online. These fraudulent schemes often promise significant tax reductions or even complete tax avoidance, leading many unsuspecting individuals into financial and legal trouble.

Recently, the ATO has reported an alarming increase in individuals being misled by online promotions that claim to offer legal ways to bypass tax obligations. These schemes, widely shared on social media and online forums, often appear legitimate but can result in severe penalties.

“We urge individuals and businesses to exercise caution when encountering schemes that claim to drastically lower or eliminate tax obligations. Engaging in these activities can have serious financial consequences,” the ATO warned.

• Advising individuals to divert money through self-managed super funds (SMSFs) inappropriately.
• Encouraging people to access their superannuation without meeting a legal condition of release.
• Structuring finances to falsely claim tax exemptions through not-for-profit foundations.
• Using complex financial transactions to obscure income sources and avoid tax obligations.

The ATO has noted that these deceptive schemes often target individuals planning for retirement and business owners looking to reduce tax liabilities.

Engaging in tax avoidance or evasion schemes carries significant risks, including:

• Hefty Penalties: The ATO imposes severe fines on those involved in tax fraud.
• Legal Consequences: Tax evasion is a serious offence that can result in legal action.
• Financial Loss: Victims may lose their money, as many schemes involve transferring funds to third parties.

To avoid falling victim to these scams, taxpayers should:

• Be Skeptical of Online Promotions: If it sounds too good to be true, it probably is.
• Consult a Registered Tax Professional: A qualified accountant or tax agent can provide legitimate advice.
• Verify Information with the ATO: If in doubt, contact the ATO directly to confirm the legitimacy of any tax-related advice.
• Stay Informed: The ATO regularly updates its website with warnings about emerging scams.

Navigating tax obligations can be complex, but taking shortcuts through dodgy schemes is not worth the risk. If you’re unsure about any tax advice you’ve received, speak with a registered tax professional to ensure you’re on the right track. If you suspect you have been targeted by a tax scam, report it to the ATO immediately.

At Holmans, we are committed to helping our clients with transparent, compliant, and effective tax strategies. Contact us today for trusted guidance on all your tax and accounting needs.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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As a taxpayer, you may likely have come across the term pay-as-you-go (PAYG).

PAYG is generally a good thing, but there can be confusion between PAYG withholding and PAYG instalments, particularly if you’re an individual who is eligible for both.

So there’s no need to worry – the ATO is not stealing your money… well, more than their normal tax system anyway. Here’s how to distinguish between the two types of PAYG you may have encountered as a taxpayer.

PAYG Withholding

As an employer, you have a role in helping your payees meet their end-of-year tax liabilities. You do this by collecting pay-as-you-go (PAYG) withholding amounts from payments you make to:

• your employees
• other workers, such as contractors that you have voluntary agreements with
• businesses that don’t quote their Australian business number (ABN).

This is to assist in minimising the impact of your employee’s tax bill at the end of the financial year. If you’re an employee, there’s no need to worry about this amount – it is what is used to work out how much tax you may owe or be owed by the Australian Taxation Office at the end of the year.

Payments other than income from employment may also need tax withheld, including:

• investment income to someone who does not provide their TFN
• dividends, interest and royalties paid to non-residents of Australia
• payments to certain foreign residents for activities related to gaming, entertainment and sports, and construction
• payments to Australian residents working overseas
• super income streams and annuities
• payments made to beneficiaries of closely held trusts.

PAYG Instalments

Pay-as-you-go (PAYG) instalments are regular tax prepayments on your business and investment income. Think of it like the PAYG Withholding above, but for income that hasn’t had any withholding applied (by your employer for example).

The instalments are designed to help offset your tax bill at the end of the financial year by paying regular instalments as you receive the income. This way, you should not have a large tax bill when you lodge your tax returns. However, the ATO system is quite crude…. and is based on the prior years tax liability. So, if your financial situation has changed, your expected tax may also change. This means your current PAYG instalments may add up to more or less than your tax at the end of the year. If your circumstances have changed, you should consult with your accountant to see if they should be varied.

When Do You Have To Pay PAYG Instalments?

If you are an individual (including a sole trader), you will automatically enter the PAYG instalments system if you have all of the following:

• instalment income (read income which withholding hasn’t been applied) from your latest tax return of $4,000 or more
• tax payable on your latest notice of assessment of $1,000 or more, and
• an estimated (notional) tax of $500 or more.

A company or super fund will automatically enter the PAYG instalments system if any of the following apply:

• it has instalment income from its latest tax return of $2 million or more
• it has an estimated (notional) tax of $500 or more, or
• it is the head company of a consolidated group.

Holmans outline what we believe the upcoming instalments will be and when they will be payable as part of our standard tax letter. You should use this table to help manage your cashflow.

PAYG Varying Instalments

You can vary your PAYG instalments if you think your current payments will result in you paying too much or too little tax for the income year. Variations must be made on or before the payment due date (28 days after the end of each quarter, generally).

You need to be careful varying instalments though…. where your varied instalments are less than 85% of your total tax payable, you may have to pay interest on the difference, in addition to paying the shortfall tax. Depending on the circumstances there may also be penalties.

However, you do not have to vary your PAYG instalments at all. It will not change how much income tax you pay for the year, just the timing of payments and refunds.

After you lodge your tax return, if your instalments were:

• too high, the excess is refunded to you
• too low, you pay the shortfall.

Your varied amount will apply for all your remaining instalments unless you make another variation before the end of the income year.

You might need to vary your PAYG instalments if the 2022 floods or other disasters impacted you.

If you cannot pay your instalment amount, you should still lodge your instalment notice and discuss a payment arrangement with the ATO. You may wish to obtain advice from a tax agent (like us) on whether you should vary your instalments.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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On 27 July 2022, the Labor Government introduced legislation (Treasury Laws Amendment (Electric Car Discount) Bill 2022) aimed at helping increase the adoption of electric vehicles by making them more affordable for Australians by reducing FBT liability to nil regardless of the amount the vehicle is used for private travel for Electric Vehicles (EV) and Plug-in Hybrid Vehicles (PHEV).

Currently, when a business owns a vehicle (directly of via novated lease) and provides the vehicle to an employee and there is an element of private use, there is a deemed ‘Fringe Benefit’ provided by the business. The business is then either liable for Fringe Benefits Tax (FBT) or your accountant makes a ‘private use’ adjustment which is added to the business as taxable income to negate any FBT liability – either way the tax benefits of vehicles owned in businesses are currently reduced for private use.

But – should the proposed legislation be enacted there will no longer be limited tax benefits for vehicles owned by businesses – provided they are ‘electric vehicles’

If an employee purchases an EV/PHEV via a novated lease, provided it is under the luxury car tax threshold then the employee can pay for the entire car and ongoing costs from pre-tax salary with no FBT payable by their employer.

If the business purchases the car outright (or via chattel mortgage), the business can potentially claim the GST, a tax deduction for the cost of the car and ongoing running expenses in full.

A quick example of how big the potential savings could be, for a vehicle used entirely for personal travel for an employee business owner operating through a Trust structure:

The business owner has personal taxable income of $200k with after tax earnings of $135k. If he/she purchases a Model 3 Tesla for $60k including GST:

Without the proposed FBT exemption, the vehicle would be purchased personally and cost $60k – no tax savings to be had.

With the proposed FBT exemption, the vehicle could be purchased by the Trust which could:

• Claim an input tax credit for the GST on purchase ($5,454 GST credit)
• Claim an immediate tax deduction for the cost of the car under the current temporary full expensing rules provided the car is acquired and ready for use by 30 June 2023
• The taxable income will be reduced to $145k and tax to c.$42k. Overall a tax/GST saving of c.$23,000 + c.$5k = $28k in the year of purchase reducing the cost of the vehicle from $60k to $32k. With no ongoing private use/income adjustments required.

Exempt car fringe benefits for electric cars will still be included for the purposes of determining an employee’s reportable fringe benefits amount. This means that the benefits will be included for the purposes of calculating an employee’s Medicare levy surcharge, determining entitlement to certain tax offsets and determining eligibility for certain family assistance payments.

The impact on an employee’s reportable fringe benefits amount should be considered when modelling the benefits of salary sacrifice arrangements taking advantage of the new FBT exemption.

Key dates/notes:

• The exemption will apply to electric cars that are first held and used on or after 1 July 2022. Second hand vehicles may qualify and the exemption may apply to vehicles ordered but not received before 1 July 2022.
• The exemption will only apply to vehicles costing less than the luxury car tax threshold for fuel efficient cars, which is $84,916 for the 2022-23 financial year.
• The car must be a battery electric vehicle; a hydrogen fuel cell electric vehicle; or a plug-in hybrid electric vehicle. There are definitions for each of these terms in the Bill. The vehicle must be a car i.e. motorbikes are not exempt under the proposed legislation.
• Exempt car fringe benefits for electric cars will still be included for the purposes of determining an employee’s reportable fringe benefits amount.

Business owners should consider whether they could implement salary sacrifice policies to take advantage of this new FBT exemption to attract and retain staff, and reduce their carbon footprint.

The Bill was before the Senate and not yet passed at date of writing this article, please liaise with your accountant prior to making any significant asset purchases as always.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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Small business owners are no different to the rest of Australia, and would often love to buy property … whether that be a new home, investment property or commercial premises.

However, those small business owners that have applied for a loan before may have seen the different and excessive rules that apply (compared to employees) when trying to obtain finance.

So how should you go about obtaining finance in the current climate, post Royal Commission, when operating a small business?

Plan Ahead

Ideally, banks want to see 2 years’ worth of Financial Statements and Tax Returns for the business and you need to be profitable.

Importantly, you can’t have it both ways, minimise tax and then obtain a large loan. The banks have started equating tax returns (with little or no adjustment) to your income for loan purposes, which is very different to years gone by.

So you need to think ahead, what is more important, saving a few hundred dollars in tax by squeezing in private items in as a tax deduction or obtaining finance for that new home/commercial property.

Pay your Tax/BAS and Employee Superannuation on time

Delays in paying tax, BASs debts or employee superannuation are more often than not seen as an instant denial of finance by the bank. The banks like to see that you can pay your debts if and when they become due… the ATO debts are no different. Importantly, the ATO also has a right to faster payment terms, priority in some cases over assets, and higher interest rates. So the bank get “bumped down the queue” and see you as a higher risk because of that.

Talk to your bank/broker and accountant early

One of the largest mistakes we see, is the small business owner advising the broker/bank and accountant last…. “Hey… I just signed a contract”!

This is a big mistake. Firstly, you should talk to your bank/broker about what they will need, in detail, to approve finance. Ensure you are able to provide that, can sustain that level of borrowings (interest rates may be higher) and your business figures will back that up.

Get your advice from the Accountant on which entity should be on the contract (can’t change afterwards) and what time delays might be in place to get that supporting documentation to the bank. Short “unconditional” timeframes and settlements may not be possible if your records for the last year aren’t done and finance is dependent on it.

There is no such thing anymore as pre-approved loans. We have seen very stable clients, pre-approved by their manager, only to have “credit” teams at the bank make the client jump through hoops for months to be finally approved. Don’t assume because the manager said so, that it is a done deal.

Using a Self-Managed Superannuation Fund will make it easier

Using a Self-Managed Superannuation Fund (SMSF) will do anything but make it easier. While a SMSFs can be advantageous in some circumstances, the legislative and banking requirements around it are laborious.

You will often need Financial Advice, potentially new entities (Bare Trusts) – add $5,000 to $7,000 setup, and 3 months settlement terms. Add to that, the fact that only very limited banks allow borrowing using a SMSF anymore and the ATO are warning against it… this is no longer the golden goose of the past.

Budget – save a deposit and have a buffer

This last one is a direct outcome of the Royal Commission. No longer will the bank assume you can finance a loan based on standard expenses (called HEM) for your size family. Instead, they will pour over your bank statements and analyse where you spend your money and how much you have left over each month.

If you haven’t been able to save a deposit or put aside “repayment amounts” in the last few months, then they are likely to ask you lots of questions on where your money goes and whether you can “truly afford” the loan repayments.

We recommend saving up a deposit, putting aside 2 months’ worth of repayments and cancelling unused Credit Cards (reducing limits on others) before consulting with the broker. While this is probably a bit more than you actually need (depending on the bank), it will greatly improve your chances of having prompt finance approval.

You should also allow for costs for your lawyer and accountant to deal with the bank finance process (explaining and signing off on bank guarantee documents, providing all the supporting tax returns and ATO information, plus supporting letters).

As small business owners, we get to be our own boss, maybe have some flexible time and control our own destiny. One of the downsides is the extra hoops we have to jump through to have a loan approved. If you plan ahead, you can make the whole process much more bearable…. At the end of the day, the goal is worth it.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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Taxable Payments Annual Report (TPAR) are to be lodged by 28 August each year.

The TPAR is an industry-specific report for businesses required to report the total payments made to contractors for their services. This report allows the ATO to improve compliance with tax obligations by comparing the payments made by one contractor against the tax returns of the people they are in turn paying.

Businesses in industries such as building/construction, cleaning, courier, road freight, information technology (IT), security, investigation or surveillance, or a mix of these services, are required to lodge.

After lodging, if you have found some information reported is incorrect or you need to add a new payee, you will need to inform the ATO. Instances that need to be reported are:

• Providing incorrect amounts in any of the amount fields – Total GST, Gross amount paid or Total tax withheld where ABN was not quoted.
• Providing an incorrect ABN or name in the payer or any of the payee fields.
• You need to add a new payee.

It is unnecessary to report if the only items wrong are payer or payee addresses or phone numbers.

A fully amended TPAR does not need to be submitted if your original report only had one or more incorrect ABNs or names (for either the payer or payee). Instead, you can correct this by sending the ATO:

• Your ABN, name, contact details.
• The year of the annual report you want to be corrected, the payee and/or payer details that were reported and need to be corrected.
• The payee and/or payer details as they should have been reported, and;
• A reason for the change or explanation of how you made the mistake.

Reports lodged online using business software that offers TPAR can generate amended reports using the software. If not reported online, you can amend the report with the TPAR online form available through ATO online services and the ATO Business Portal, a paper form Taxable payments annual report (NAT 74109) or tax and BAS agents can lodge amendments for their clients.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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I have been an accountant for over 20 years, and this is by far the worst I have ever seen the ATO (Australian Tax Office) in terms or warnings and potential actions (ATO Audit) leading up to a tax year. It really is a case of “gloves off” approach by the ATO this year and they are non-apologetic about it.

Accordingly, Tax Agents are bracing for a large number of audits this coming year, including on small claims such as laundry and business usage on phones and internet (which is unusual).

Common ways you could have yourself selected for Audit by the ATO:

1. 1. Not paying your employees superannuationTax agents suspect this will be a very high priority in the coming 2 years. They have also announced an Amnesty indicating you need to get it up to date, or server penalties will apply on detection later. A sure sign Audits are coming in this area.
   2. Undeclared cash (or other) incomeThey have a number of ways to track and detect this, including matching to deposit information at banks, spot visits to cash businesses (they caught over 30 businesses on the Sunshine Coast 12 months ago using this – ie Cafes so-on), Costs of living by postcode vs income, benchmarks outside industry and many more.
   3. Businesses consistently showing lossesAre you operating a business or a hobby? The ATO view consistent losses as a hobby or lifestyle choice and are likely to deny your loss or audit your expense claims. This is particularly relevant if you have employment income and are running a side business or farm.
   4. Financial business performance that is not in line with your industries benchmarks. The ATO have access to an incredible amount of information, and if they wish, can compare your business to other businesses by postcode, type so-on. Be careful not to push the envelope too far on your claims or what is considered “reasonable”.
   5. Claiming deductions more than others in your job descriptionsame as above, but for employees.
   6. A poor lodgement and payment history with the ATO

 

1. Using a Tax Agent with a history of Audit FailuresJust as the ATO benchmark businesses, they benchmark tax agents. You should only use those tax agents that are trustworthy and understand the rules (i.e. check their qualifications, experience, how far they push the envelope). Even if you do the right thing, you may be tarnished by association.
2. Luxury cars, boats and homes…With low income or owned in business structures. The ATO data match to State Government registration details to check whom might be an audit candidate.
3. Unexplained wealth or lifestyle…Including travel overseas…. In fact, the Commissioner in a recent interview with the Chartered Accountants gave this example, “say you have a two parent family reporting $70,000 and $50,000, but has three children at private schools, has taken business class flights on overseas trips three times in the last two years” might be a flag for audit. Did you know that the ATO have access and data match flight records, credit card transactions, bank deposits, and a dedicated Social Media team that trawl social media posts of people they believe might be living beyond their means (potential hidden income). They have already successfully caught or proven undeclared income using social media.
4. Motor Vehicles owed in business structures and nothing reported at Employee Reimbursements/FBT Reimbursements in the tax return.Use an accountant that does it properly will solve this one. Not all accountants are created equal.

Of course, the key is to avoid the above ATO Audit triggers…. And where some of those items are just part of your normal business or profession (ie Travel), then ensuring you have the documentation to back up your claim and an accountant that knows the relevant rules.

Holmans also offer ATO audit protection insurance to our clients. The premium covers our professional fees to assist you manage a review or audit from the ATO, if you are selected. It also covers other Government Audits such as Workers Compensation, Workcover and Payroll Tax authorities.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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