AIBS National News

Small to medium enterprises range from very simple businesses which have high turnovers to businesses with complex structures involving multiple entities, including subsidiaries of large multinationals.

Generally, smaller businesses do not have access to the same resources and expertise as large businesses, although they may have to deal with equally complex tax issues. The relative lack of disclosure requirements for private companies also presents us with particular compliance challenges, as does the personal connection the controllers have with their businesses.

Our risk-management approach with small to medium enterprises is to:

• provide businesses with the information and support they need to comply with tax obligations
• alert businesses to compliance risks - that is, practices and patterns of activity that may suggest non-compliance
• take action against those who deliberately or persistently fail to comply, which may include letter or phone contact, visits, audits, penalties or court action.

Our compliance assurance tools include data matching - that is, comparing information that businesses provide to us in returns with information supplied by third parties, including financial institutions, government agencies and industry. This process is increasingly automated and comprehensive.

We also use statistical analysis to help identify tax risks based on business operating patterns that are outside industry norms or expected economic performance.

When undertaking risk assessments and other compliance activities we focus on the economic group (including related companies, superannuation funds, trusts, partnerships and in particular the controlling individual) rather than the individual entities. We also look at the transparency of business transactions between associated entities and their tax effects.

Our compliance monitoring also takes into account the tax risks associated with different stages of the business life cycle, such as growth spurts, succession planning and business disposals.

To help businesses manage their tax affairs we continue to provide help and information products tailored to the specific needs of small to medium enterprises, particularly those at the lower end. Our web-based business portal has made advancements in capability and we encourage businesses to take advantage of the business portal for electronic lodgement and reporting obligations. On our website we have a comprehensive range of new and updated education products available, for example:

• FBT and entertainment for small business
• fuel tax credits expanded from 1 July 2008
• frequently asked questions for service trusts
• Division 7A Calculator and Decision Tool.

Tax crime investigations and results

* This information is current up to 31 March 2009.