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An ATO crack down warning from your small business accountant

As your small business accountants we need to let you know that a recent tax ruling by the High Court of Australia held that the ATO was not entitled to withhold BAS refunds where the ATO had chosen that particular BAS for a compliance review. (Commissioner of taxation v Multiflex Pty Ltd 2011) Whilst this was a great win for the taxpayers of Australia, in particular small businesses the Federal Government has decided to initiate exposure draft legislation to overturn this decision, thus allowing the ATO to hold on to GST refunds until they have completed their compliance checks.

As small business advisers we can appreciate that this area is open to fraudulent activity and that this is one area the ATO must crack down. However, I have no doubt that this measure is also going to hurt small businesses. Small businesses in their infancy spend significant amounts of capital in setting up offices/factories and retail premises and often rely on the subsequent GST refunds to keep the business liquid in its early stages. By allowing the ATO to hold on to this money, it will mean small businesses are going to need to find extra sources of short term working capital if the ATO decides to review a lodged BAS return.

Thankfully the ATO is getting more efficient at turning these reviews around but where information is difficult to verify the review can take up to two months or longer. Let's all hope that the legislation, if passed, makes concessions for small businesses to keep the economies biggest employer, small business, in a strong position.

For any further assistance with this matter contact us and take advantage of our accounting services in Surry Hills.

 
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