ATO continues focus on small business as part of efforts to close $10 billion tax gap
The ATO has received additional funding through the Black Economy Taskforce and its enhanced enforcement covers lodgment, employee entitlements, mobile strike teams, tax system integrity and the use of data and technology.
The new Tax Integrity Centre and whistleblower protections will allow the community to report suspected or known black economy, tax evasion and illegal phoenix activities to a Black Economy Hotline.
Small and farm businesses need to ensure their bookkeeping and lodgments are correct and up-to-date. You should obtain professional tax advice, especially in areas where more complex tax issues arise. This includes structures, capital gains tax, personal services income, trust declarations and distributions, and private company loans.
Farm management deposits
One of the best tax planning measures available to primary producers is effectively utilising the farm management deposits scheme (FMDs). They are an effective business and cash flow planning tool.
Primary producers can deposit up to $800,000 in a FMD account, they can have early access to their FMD account during times of drought, and they may be able to offset the interest costs on primary production business debt.
Income averaging
Tax averaging enables primary producers to even out their income and tax payable over a maximum of five years to allow for good and bad years. This ensures that farmers don’t pay more tax over time than taxpayers on comparable but steady incomes.
Primary producers who opted out of income tax averaging for 2008-09 will be automatically reinstated in 2018-19 but can choose to withdraw from averaging and pay tax at ordinary rates for 10 years.
Other primary producer-specific tax concessions
Don’t forget to consider:
- the uncapped immediate write-off for capital expenditure on water facilities and fencing assets
- the deduction for the full cost of a fodder storage asset if the expense was incurred or it was first used or installed ready for use on or after 19 August 2018
- the outright deduction for capital expenditure for landcare operations and carbon sink forests
- the accelerated write-off for horticultural plants and grapevines.
Record keeping tips
- Record cash income and expenses
- Account for personal drawings
- Record goods for your own use
- Separate private expenses from business expenses
- Keep valid tax invoices for creditable acquisitions when registered for the goods and services tax (GST)
- Keep adequate stock records
- Keep adequate records to substantiate motor vehicle claims
