The Assistant Treasurer David Bradbury has today released the Inspector-General of Taxation's (Inspector-General's) Review into the ATO's use of benchmarking to target the cash economy.
The Inspector-General conducted this review in response to concerns raised by small businesses, tax practitioners and their representative bodies about the Australian Taxation Office's (ATO's) use of small business benchmarks.
The Inspector-General has made 11 recommendations to improve the use of benchmarks by the ATO. The ATO has agreed with nine of the recommendations in full and two in part.
The recommendations should improve the ATO's risk identification and audit selection processes to further exclude compliant taxpayers from audits and thereby minimise unnecessary compliance costs.
"Compliance in the cash economy is important for the integrity of the tax system and I welcome the cooperation between the Inspector-General and the ATO to improve how benchmarking is used to enhance compliance," said Mr Bradbury.
"The cash economy benchmarking program was developed following Government funding in the 2009-10 Budget to promote a level playing field for small business. The program makes sure that those small businesses that are doing the right thing and paying their taxes are not undercut by the small minority that try to avoid their income tax and GST obligations."
The Inspector-General's report, including the ATO's response, is available at the Inspector-General's website.