Money
Issue No. 13 - October/November 2003
Taxing Times
Tax Matters — Keeping You up to Date
by John Rawson
If your enterprise is a cash—based business, look out – the taxman is on the warpath.
Cash economy businesses have been identified as ‘high—risk industries’ in the Australian Taxation Office’s recently—released official compliance program for 2003—4.
Enterprises under the Tax office spotlight include restaurants, cafes and takeaways, building and construction, hotels and clubs, barter, hairdressers, taxis and fishing.
These businesses can expect some unannounced visits by the taxman.
The ATO will check that compliance is up to date on Australian Business Numbers (ABN), Goods and Services Tax and Business Activity Statements.
For businesses with an annual turnover of less than $2 million, the ATO will focus on GST registration and GST record—keeping compliance.
GST on the sale of business assets and superannuation contribution guarantee (SCG) compliance are also high on the agenda.
Audit issues for small to medium enterprises (SMEs) of an annual turnover between $2 million and $100 million will include GST refund checks, reviews of GST registrations and scrutiny of BAS lodgement compliance.
Risk reviews, typically applied to large businesses, will be extended to SMEs.
In addition, the ATO will develop so—called risk profiles for larger businesses, with the result that 50 percent will undergo a GST compliance review. Thirty broad issue GST audits are planned, along with 1200 ‘transaction specific’ GST audits.
ATO ruling confirms tax impost on trust borrowings
Trusts that borrow to fund distributions to beneficiaries may be restricted in claiming tax deductions for interest incurred on the borrowings, under a recent Tax Office ruling.
The ruling (TR 2003/9) states that interest incurred by a trustee on borrowings used to meet an obligation to pay a distribution would not, of itself, be tax deductible.
However, interest will be deductible if the borrowed fund...
