Due to the global pandemic, there are stimulus packages and some tax deductions available for sole traders and companies, but the Australian Tax Office (ATO) is warning business owners who are complacent and try to claim benefits they’re not entitled to. These instant asset write-off and government stimulus packages were designed to help business owners who genuinely need the help.
Recently, the ATO issued a reminder to businesses to adhere to the strict guidelines. Jeremy Hirschhorn, the Second Commissioner of Client Engagement Group, discouraged businesses looking to obtain benefits from loopholes. While it’s reported that a majority of companies are compliant—92.5% voluntary compliance at lodgement and 96.3% after compliance activity—the ATO wants to grow those percentages even further.
The ATO advised businesses that are using the pandemic stimulus packages to abide by all tax regulations and the ‘spirit’ of the law. While there are no stimulus regulations that prevent companies from using the benefits for upper management bonuses or distribution to shareholders, the ATO requested for companies to think about the way it might be perceived publicly. “I suspect the community will have even less sympathy for companies seen to be exploiting loopholes,” Hirschorn said when speaking at an event for the Australian Financial Review.
Government stimulus packages, immediate asset deductions and carry back losses were designed for specific intended purposes, not for businesses to artificially manufacture circumstances. “These measures should be embraced, but for the purpose for which they were introduced. Invest in a new plant, upgrade your facilities, claim a tax offset and reinvest the money in your business and jobs!” Hirschorn said.
If your company has complicated tax circumstances and is being audited, Hirschman advised the best practice is to keep the communication channels open, engage and be completely transparent to enable resolutions about any issues.
The ATO also suggested corporate taxpayers should draw on available resources available from the ATO such as the GST analytical tool to instructions on the best practices to reconciling financial statements.
If you are unsure whether or not your business meets the requirements to access government stimulus packages, it is advisable to seek out the assistance from a corporate tax accountant. Hirschhorn advised it was a bad idea to rely on being overlooked by the ATO.
Honesty and compliance with the strict guidelines are paramount to Australia’s economic recovery. However, with the additional financial supplementscomes increased expectations for businesses to meet their tax responsibilities. The pandemic will not be an excuse for not meeting your tax obligations or claiming benefits your business isn’t entitled to.
If you are unsure about whether you are entitled to claim government stimulus packages or
If your company’s changing circumstances still allows you to legally access stimulus packages, use a corporate tax accountant that specialises in staying up to date with the latest government guidelines.