OZschwitz slave pen: Thieving tax office targets 46,000 'suspect' businesses

The Australian Tax Office will investigate 46,000 businesses for under-reporting sales or evading tax by deliberately shifting transactions to cash.

“The ATO is confident that we have enough data available to us now to risk assess the 1.3 million businesses with the potential to under report their cash income,” the ATO said.

“Most businesses are within (their) benchmark and generally we have no reason to be dissatisfied with their compliance,” the ATO said in a statement. “Similarly, most tax practitioners have clients who operate within the benchmarks.”
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However, about 46,000 businesses report earnings outside of their industry benchmarks “and may be subject to additional scrutiny,” the ATO said, citing a speech given by tax commissioner Michael D'Ascenzo to the Tax Institute in Brisbane yesterday.

Using data mining, Australia's federal tax authority compared the income levels of 600,000 businesses to the benchmark revenue levels it had previously established with the various industries.

Data mining involves analysing databases for links in behaviour, which they can use to predict the likelihood of other behaviour. It's the same technology that allows online retailers, such as Amazon, to make suggestions for future purchases based on a customer's previous choices.

The ATO uses benchmarks “to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income,” the office said in November.

“Businesses reporting outside the benchmarks may attract our attention. There may be good reasons for this difference, but it may also be an indication that the business is not recording and paying tax on all transactions, especially cash transactions,” the ATO said in November.

The ATO has established cash sales benchmarks for hairdressers, clothing retailers, coffee shops, florists, fruit vendors, pubs, and grocers among others.

In yesterday's announcement, the ATO noted that “half of the businesses falling outside industry benchmarks are represented by around 1700 tax practitioners.”

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OZschwitz slave pen: Thieving tax office targets 46,000 'suspect' businesses

OZschwitz slave pen: Thieving tax office targets 46,000 'suspect' businesses

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