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  • ATO action to reduce the gap

    It is important to acknowledge the impact that COVID-19 poses to Australia's small business community. While the longer-term effects are still unfolding, we are exploring ways to deliver quality services and provide ongoing assistance to help the community get back on its feet. Balanced compliance approaches are in place to support those in need and ensure fairness in the tax and superannuation systems.

    Equally, it is important to recognise the role Australia's tax system plays in supporting the community. Protecting the integrity of the tax system and maintaining its effectiveness is critical.

    The key to an effective tax system is a high level of willing participation. The extent of taxpayers' willingness to participate depends on whether they:

    • value the tax and superannuation systems
    • have trust and confidence in us as administrators.

    Our strategies to reduce the gap and encourage willing participation are based on these principles. They include:

    • offering a range of tools and services, making it easier for small businesses to get their tax and super right and navigate some of the complexities of the system
    • working closely with tax practitioners and our other partners, helping us to deliver integrated strategies to engage with small businesses.
    • balancing the small business community's need for guidance, support and empathy with our regulatory role.

    The shadow economy has an impact on the tax gap, and on honest small business owners. We're continuing our focus on businesses that actively avoid paying the right tax by:

    • enhancing our enforcement strategies to better target those doing the wrong thing
    • using data-matching, risk modelling, benchmarks and third-party data to identify at-risk businesses.

    We also provide insights to government, through Treasury. We point out potential opportunities for statutory law reform to improve the tax system. We do this where we see the law is difficult to apply, and where compliance costs are unreasonable. In addition, we suggest where the law can be strengthened. This will allow us to more effectively deal with compliance risks.

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      Last modified: 19 Oct 2020QC 59986