The Australian Taxation Office (ATO) is relatively transparent when it comes to industries or areas of interest, and the media are typically on the pulse to broadcast this information to the public. I find new legislation or changes in regulations an accurate indication as to where the peaks in audit activity will occur in the future. As such, the following outlines my predicated key focus areas which can expect an increase in audit activity:
Through the establishment of SuperStream, the ATO now have real time data to track employers who are not appropriately paying superannuation guarantee (SG) contributions. It is only a matter of time until the audits start to flow through the letterbox.
It is no secret that substantial changes in Self Managed Superannuation Funds (SMSF) will take effect as of 1st July 2017, with a headlining change being the introduction of the $1.6 million transfer balance cap. The significance of this cap is that it affects both current retirees and individuals yet to enter the retirement phase and we are already seeing many experts in the SMSF area saying the ATO will be closely scrutinising compliance with these changes. The ATO are also scrutinising arrangements where individuals at, or approaching, retirement age intentionally divert their personal services income to a SMSF to minimise or avoid income tax obligations. The voluntary disclosure in relation to this matter has been extended to 30th April 2017, and I am sure we will see a flurry of activity after this time.
3. Single Touch Payroll
As of 1st July 2018, it will be mandatory for all businesses with more than 20 employees to report through the Single Touch Payroll system. Employers will be required to report SG payments concurrently to paying employees, and Superannuation Funds will also have to report contributions. This system will equip the ATO with new information and enable compliance
cross-checking, which is bound to subsequently increase audit activity.
4. Data matching and information sharing
‘Data matching’ is a buzz word in the world of taxation and it is no surprise that the ATO, State Revenue Offices, WorkCover authorities and vehicle registration departments are all sharing data such as reported wages, contractor payments and motor vehicle registration details (FBT). Similar to other established processes, this data sharing and matching is in place to ensure compliance and to detect potential under payments.
Audit activity in Australia is still as prevalent as ever and one thing is certain – superannuation is on the top of the list for the ATO, and I predict it will continue to be the case for the foreseeable future.
By Rod Spicer, General Manager of Claims and Underwriting