Cashflow is the lifeblood of all businesses – chasing debtors is often the least liked aspect of the cashflow cycle.
Just say you’ve been a bit slack about collecting your debtors; now imagine that you could collect say 20% of them instantly – what positive impact would that have on your bank account.
The ATO has a section referred to as the “Cash Economy”, where they use benchmarks to ascertain whether businesses are disclosing the appropriate revenue based on their cost of goods sold, wages or rent.
Business that do not disclose fully their cash sales, and thus under-report their revenue, may fall outside the benchmarks. Some businesses do fall outside these benchmarks; there may be a variety of reasons – the business does not fit the benchmark or operates concurrently in different industries.
If the business is selected for an audit, the ATO will generally contact the tax agent by telephone or by letter requesting information. It is not just the ATO that is increasing their audit activity.
The State Revenue Office has indicated that it is more likely to instigate an audit if the business lodges its payroll tax information late.