5 valuable tax tips to help you avoid a fine

As the Australian Taxation Office ramps up its compliance campaign, taking small businesses to court for not lodging activity statements and tax returns and not complying with other rules, here are five useful tips to help you meet your tax obligations.

1. Lodge your activity statements on time

Businesses use an activity statement to report and pay a number of tax obligations, including GST, pay as you go (PAYG) instalments, PAYG withholding and fringe benefits tax. Activity statements are also used by individuals who need to pay quarterly PAYG instalments.

2. Check the changes to concessions

Some small business concessions have now been removed or reduced from 1 January 2014 and that might affect your 2013–14 business income tax return. The changes include a reduction in the instant asset write-off limit from $6,500 to $1,000 and the removal of the accelerated initial deduction for motor vehicles.

3. Crackdown on cash

The ATO is cracking down on the building and construction industry as well as restaurants, cafes and takeaway businesses, looking for those who don’t report income or pay cash-in-hand wages to avoid tax or super. To assess businesses, the ATO will look for lifestyle and spending habits that exceed business income; compare businesses against benchmarks, review information such as bank transactions and investigate tip offs from the community and employees.

4. Selling imported goods

Don’t make the mistake of incorrectly accounting for the on-sale of imported goods on your BAS (business activity statement). The ATO advises that when imported goods are on-sold, you need to report the sale on your BAS and account for GST, even if you’ve already paid GST on the importation.

5. Selling services

Be careful not to incorrectly classify supplies of services connected to Australia. If a service is physically performed in Australia, says the ATO, then GST law applies, even if the supplier or the recipient of the supply is outside Australia.

You can find more information on these tips and more here [www.ato.gov.au/Business/]

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