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ATO extends black economy crack down to promote "level playing field" among small businesses


The Government is extending its crackdown on the so-called "black economy", with additional resources for the ATO to target small businesses that are outside of the tax system or evading tax, such as through undeclared cash transactions. For example, a restaurant owner might offer a special meal at a good price if you pay cash, and keep the transaction off its books so it is not subject to tax.

In the 2017-18 Budget, the Government has allocated an additional $32 million to the ATO, to give a one year extension to its Strengthening Foundations and Level Playing Field initiatives. These initiatives are designed to reduce tax evasion among small and medium businesses. The Strengthening Foundations initiative targets businesses with a turnover from $2 million to $15 million, while the Level Playing Field initiative targets businesses with turnover under $2 million. The Budget papers note this will involve "audit, review and intensive follow up" of small businesses. The improvement to the budget bottom line over the 2017-18 to 2020-21 financial years is estimated to be around $365 million.

Small businesses also need to be aware the government is tightening up capital gains tax concessions for small businesses so that only assets genuinely related to the small business are eligible for the concessional treatment. But there is little detail in the Budget papers on what this involves exactly, and no estimates of the impact on the bottom line. Small businesses intending to use these concessions should seek professional advice.


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