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Posted on May 31, 2016

Although it is not well known, the Australian Taxation Office (ATO) has had a change of attitude. It is said that in the last 12 months the ATO has gone from being an educator to becoming an enforcer.

It is important that every Australian small-business is very aware of this change and the quality and timeliness of their Business Activity Statements (BAS) and their income activity statements.

Although the ATO has had garnishee and other powers for a long time, it is ramping up to use new technology to a higher degree than ever before.

Before long it will be possible for the ATO to view your bank account activity in your business and personal bank accounts live. This will be achieved through the use of many high-speed computers and represents many years of software development coming to a point of hardware technology capability that is higher than ever before.

What does this mean for the Australian small business person? It means that your systems need to be as good as their systems. For the small businesses that are using Xero Accounting Software and other automatic bank feed and information delivery systems and tending to their books on the regular daily or weekly basis, there will be almost no impact. The reason for this is you are already using high level systems to maintain a high level of compliance.

The new methodology is all about collection. The fines are significant and immediate. The first non-lodgement is $220 the second non-lodgement is $550, the 3rd and every subsequent non-lodgement, is $880. In one year it is possible to have fines of over $2500, just for non-lodgement of all your business activity statements.

This new regime is about using force to get tax dollars in. From the point of view of the business owner, your best defence is preparedness.

In Xero it is possible to generate a “GST Required” report at any time. If you do so you will know exactly how much GST you will need to have available at the end of the reporting period. Geelong Premier Bookkeeping clients are encouraged to look at this report at the end of each week and transfer appropriate funds to keep their balance close to what is needed.

By doing this there are no nasty surprises. It’s all about awareness. But for some businesses this degree of vigilance is very difficult, given how busy they are.

To be fair, whenever our Geelong bookkeepers contact the ATO, as the BAS agents for our clients, we have found them to be fair and reasonable and in most cases even kind and understanding. As BAS agents, Geelong Premier Bookkeeping can often get results far better than average.