Tax planning plays a major role in small business planning. Find out more about the unlawful tax strategies you should avoid before seeking professional tax accounting services.
For the previous tax season, the Australian Tax Office (ATO) implemented a risk differentiation framework for corporate tax payers. As the name suggests, tax payers that belong to the high-risk bracket undergo a more scrupulous tax compliance inspection compared to other companies belonging to lower risk categories.
Given the increase focus on tax compliance by the ATO through developments in technology and access to data, there are two major areas of tax that all business owners should avoid.
Australian taxation laws allow legitimate tax minimisation strategies to enable tax payers to pay their tax dues by reducing their tax liabilities. Various superannuation, estate planning and corporate budgeting strategies help keep your tax bills down. When you go overboard with tax minimisation strategies that extend beyond legal parametres, this is when the ATO will call your attention. Such offences are referred to as tax avoidance.
In most instances, business owners undertake tax avoidance by claiming a large sum of tax deductions which their business is not eligible for.
If tax avoidance already triggers a red flag for the ATO, can you imagine how worse it could be if you are found guilty of tax evasion? Tax evasion is a criminal offence because of the strong assumption that tax evaders are intentionally hiding their income from the tax office.
There are many different ways to evade your tax liabilities; deliberately avoiding tax payments and lodging claims for your tax returns even when you are not eligible for these top the list.
Consequences of Non-compliance
Admittedly, there are businesses that get away with lapses in tax compliance. But would you opt for such drastic measures if it would put you at risk for tax penalties and interest charges? And we haven’t even touched base on the possibility of graver reprimands from the tax office when your business gets chosen for a random ATO audit.
There are many business matters that you can work around by seeking the services of a tax professional to ensure your tax claims are legitimate and don’t fall foul of current tax legislation.. Tax compliance demands year-round organisation of your books, accurately-interpreted financial statements and properly lodged BAS and tax returns. Staying on top of all these will significantly help you take charge of your tax liabilities.
Need help in getting your taxes in order? Download our eBook to learn more about effective accounting strategies or contact our qualified advisers at HTA Advisory today!