24th April 2018

2018 has so far highlighted the fact that taxpayers are under the magnifying glass, and vulnerable to brutal consequences handed out by the Australian Taxation Office (ATO).

It is no secret that one topic receiving attention is superannuation guarantee (SG) compliance. According to an article published in SMSF Adviser in March this year, the ATO has more than doubled the number of SG non-compliance cases in the current financial year and raised approximately $509 million from work carried out over a 6 month period. The activity represents a 105 per cent increase from the cases that were completed in the same period last year. In terms of revenue raised from this initiative alone, a 50 per cent increase was noted resulting in an additional $37 million of revenue to the ATO.

In addition, it is likely that the ATO will be granted further power over employers who are not compliant with superannuation guarantee requirements under new laws introduced to parliament in early 2018. These penalties could include imprisonment, and of course monetary fines. Single Touch Payroll will be a gateway to the ATO monitoring compliance in this matter. There is no doubt that superannuation payments from employers to employees will be meticulously reviewed over the coming year.

“Cases are already flowing through to us where we are seeing SG compliance related demands” said Roman Kaczynski, Director at Accountancy Insurance.

“One example I came across recently was when an employer was due to pay their superannuation for the December 2017 quarter by the end of January. They were 40 days late in making this payment, and without hesitation the ATO contacted the employer just weeks later demanding that they complete and submit shortfall forms. Without a doubt, the ATO are really cracking the whip now” said Roman.

The sheer volume of revenue raised is enough evidence to support the fact that audit activity is at an all-time high, and the ‘gung-ho’ attitudes of ATO employees also adds fuel to the fire.

Earlier in the year the ATO Tax Commissioner, Chris Jordan controversially stated that in the ATO’s random enquiry program which focused on work-related expenses, agent prepared returns were found to be the most incorrectly claimed, and he was “disappointed” with tax agents. Considering Mr Jordan’s dismay and the fact that the work-related expenses gap is estimated to be more significant than the corporate tax gap of $2.5 billion, it is doubtful that the ATO will falter in the pursuit of increasing further activity in this area. It is not unreasonable to anticipate that many compliant taxpayers could be caught in the cross hairs as a result.    

In an explosive interview on the television program, Four Corners earlier in the month, two employees claim that the ATO deliberately target Australian taxpayers in order to raise revenue, which comes at the expense of correct procedure and fairness to taxpayers. The segment uncovered a program within the realm of the ATO named “The Plan” which is an internal mechanism encouraging all ATO employees to identify key target areas, and aim to reach revenue goals attributed to those areas.

Despite whether these accusations are entirely accurate, it is fact that in the last financial year the ATO raised $15.6 billion which represents a 13% annual increase on the previous period. An increase in revenue, despite how it is achieved, is occurring.    

Accounting firms can proactively protect their firm and clients against the ramifications of rising audit activity with Accountancy Insurance’s Audit Shield. Find out how Audit Shield can assist your firm.





         Chartered Accountants

Tax Institure