Contact: Gavin Clancy
Deloitte
Communications Manager
+61 3 9208 7759

Contact: David Pring
Deloitte
Tax Partner
+61 2 9840 7311

While SME company shareholders benefited from long overdue compliance simplification, in the budget, SMEs were put on notice of increased ATO risk assessment and potential audit activity, according to Deloitte.

Deloitte Tax Partner David Pring said companies with turnover between $50-100 million are on notice that they were clearly in the ATO’s sights. 

“The ATO attention that we have foreshadowed has now been formally announced,” he said.

“Expect more risk assessments and in turn more audit activity in the sector, while small companies with turnover of more than $2 million are also on notice that the Tax Office will be paying more attention.    

“The Budget papers show that the SME measures do not cost the government a cent but it is clear that they expect to increase the SME tax take by increased audit activity,” Mr Pring said.

The budget papers do not show how much the government expects to raise from SMEs however total company tax receipts are expected to increase by $2.1 billion with only $1.7 billion arising from growth in company profits.  Does this mean the government is expecting to raise an additional $400 million from increased audit activity in the SME sector? he asked.

According to Mr Pring, SMEs are generally under resourced and this increased scrutiny will increase the cost of compliance in the sector yet again.  Companies need to understand their high risk areas and reduce their risk profile before the ATO visits.

Companies need to consider if their systems are coping with the demands of PAYG, FBT, GST and superannuation guarantee obligations.  Specific areas of review will be compliance with deemed dividend rules, family trust elections and most likely transfer pricing documentation.

“SME’s must look at their tax risks because the ATO will be calling,” Mr Pring said.