ATO crackdown on employers, according to DeloitteDOWNLOAD
21 March 2011: Businesses should expect an unprecedented level of review by the ATO in the coming 12 months in relation to fringe benefits tax, PAYG withholding and superannuation guarantee, according to professional services firm, Deloitte.
The ATO has recently announced a targeted review of employer obligations with up to 5,000 employers having their employment tax obligations put under the microscope this year. This is in addition to the existing compliance reviews already being undertaken by the ATO.
Frank Klasic, Deloitte Employment Taxes partner, said these reviews would bring many employers under the ATO radar for the first time.
“What many employers may not be aware of is that the ATO can assess these employer obligations for a much broader period than most other taxes. FBT, for example, can be assessed retrospectively for up to 6 years, or even longer in certain circumstances. Any shortfalls in superannuation guarantee can be for an even longer period. Getting it wrong can therefore add up to costly repayments of tax, penalties and interest charges,” Mr Klasic said.
He said common reasons for underpayments of employment taxes was often due to incorrect positions being taken under the tax law or a lack of substantiation or record-keeping.
“Employers who have never had their employer obligations reviewed should jump on the front-foot and do a quick health check with their tax advisor before the ATO comes knocking on the door,” Mr Klasic said.
“Identifying an issue before the ATO undertake an audit allows employers to make voluntary disclosures and lessen the chance of penalties.”
Mr Klasic said the ATO has also announced a specific focus on living away from home allowances (LAFHA), which are usually provided tax free to employees. From April 2011, many employers will be contacted and asked to provide substantiation in relation to these allowances.
“The LAFHA tax exemptions work well if you get it right. If you haven’t structured these correctly for tax purposes, the consequences can be detrimental for the employee and the employer,” Mr Klasic said.