Small business income tax gap: Video and audio grabs

Video and transcript

Deborah Jenkins Small business income tax gap video download (MP4 65,409KB)This link will download a file

Hi, I’m Deborah Jenkins, Deputy Commissioner Small Business at the ATO.

Today we’ve released our review into small business income tax performance, which is also known as the small business income tax gap.

The good news is we’ve found about ninety per cent of income tax from small businesses is paid voluntarily or with little intervention from us. Considering how much small businesses have on their plate, I think this is a great result.

Businesses who stay on top of their tax obligations have a few things in common. They keep good records, use technology to keep things on track, and are in regular contact with their advisers.

The disappointing news is a small percentage of businesses are deliberately avoiding their tax obligations. They do this by hiding income, exaggerating expenses and operating outside the system, and we call this the black economy.

We’re talking about things like “cashies” on the weekend. It might not seem like much at the time, but it all adds up. This is real money the community is missing out on for services that we all rely on, like roads, schools, and infrastructure.

It’s just not fair. These businesses aren’t competing on a level playing field and they’re getting an unreasonable advantage over those doing the right thing. So, to narrow the gap and make things fairer we’re implementing a number of initiatives, such as:

• extending the Taxable Payments Reporting System to new industries,
• a new tip off hotline where people can report suspected black economy behaviour to us, and
• visiting close to 10,000 businesses around the country this financial year to help them get on track and taking compliance action when we see deliberate black economy activity.

To find out more about the small business income tax gap, visit ato.gov.au/SmallBizTaxGap

Audio and transcript

This shows that the vast majority of small businesses in the tax system are trying to do the right thing.

Deborah Jenkins audio download Sb_income_tax_gap_01 (MP3 274KB)This link will download a file

Small businesses make up more than 99% of all Australian businesses. They contribute $380 billion dollars to the economy each year and employ around five million people.

Deborah Jenkins audio download Sb_income_tax_gap_02 (MP3 489KB)This link will download a file

The good news is we’ve found about 90% of income tax from small businesses is paid voluntarily or with little intervention from us. Considering how much small businesses have on their plate, I think this is a great result.

Deborah Jenkins audio download Sb_income_tax_gap_03 (MP3 563KB)This link will download a file

We recognise the important role that tax professionals have in helping small businesses get their tax right and we would not have been able to achieve this result without the support of our tax professionals.

Deborah Jenkins audio download Sb_income_tax_gap_04 (MP3 480KB)This link will download a file

In addition to seeking qualified advice from a registered tax professional, we know that small businesses who keep good records and have invested in record keeping software are more likely to get their tax right.

Deborah Jenkins audio download Sb_income_tax_gap_05 (MP3 500KB)This link will download a file

We’ve found that some small businesses are making mistakes with their tax, but these are often unintentional errors which are easily fixed. Our objective is to support these honest small businesses to better understand their obligations and to help them get it right the first time.

Deborah Jenkins audio download Sb_income_tax_gap_06 (MP3 688KB)This link will download a file

Internationally, tax gaps are difficult to compare, but what’s clear is we are performing well in terms of small business compliance, and that is something worth celebrating.

Deborah Jenkins audio download Sb_income_tax_gap_07 (MP3 452KB)This link will download a file

The disappointing news is a small percentage of businesses are deliberately avoiding their tax obligations. They do this by hiding income, exaggerating expenses and operating outside the system, and we call this the black economy.

Deborah Jenkins audio download Sb_income_tax_gap_08 (MP3 649KB)This link will download a file

Small business operators that engage in black economy behaviour are not competing on a level playing field. They have an unfair advantage over those doing the right thing.

Deborah Jenkins audio download Sb_income_tax_gap_09 (MP3 421KB)This link will download a file

We’re talking about things like “cashies” on the weekend. It might not seem like much at the time, but it all adds up. This is real money the community is missing out on for services that we all rely on, like roads, schools, and infrastructure.

Deborah Jenkins audio download Sb_income_tax_gap_10 (MP3 602KB)This link will download a file

Hiding income, exaggerating expenses and operating outside the system are all considered to be black economy behaviours. Businesses doing the wrong thing are about to attract our full attention.

Deborah Jenkins audio download Sb_income_tax_gap_11 (MP3 512KB)This link will download a file

It’s just not fair. These businesses aren’t competing on a level playing field and they’re getting an unreasonable advantage over those doing the right thing.

Deborah Jenkins audio download Sb_income_tax_gap_12 (MP3 385KB)This link will download a file

We're implementing a number of initiatives to tackle the black economy. Changes like a ban on sales suppression software and a new tip off line where people can report suspected black economy behaviour to us.

Deborah Jenkins audio download Sb_income_tax_gap_13 (MP3 484KB)This link will download a file

We've stepped up our enforcement activities, including highly visible mobile strike teams. We visited close to 10,000 businesses around the country last year and we plan to visit another 30,000 more over the next three years

Deborah Jenkins audio download Sb_income_tax_gap_14 (MP3 566KB)This link will download a file

To find out more about the small business income tax gap, visit ato.gov.au/SmallBiz TaxGap

Deborah Jenkins audio download Sb_income_tax_gap_15 (MP3 198KB)This link will download a file