ATO will use big data to ensure businesses pay their fair share of tax

The Australian Taxation Office (ATO) has flagged that one of its “key focus areas” for this financial year will be to improve the tax compliance of the small business sector.

As part of that focus, the ATO said it would take a digital-first approach and encourage small businesses to do likewise. This would allow the tax office to provide “high-quality, system-generated tax guidance” that would "minimise errors, increase confidence and promote right-time reporting and payment".

The ATO said another priority this financial year would be to chase tax debts, with a focus on high-value and aged debts. This would be done by:

• Taking “decisive and swift action” with businesses that are purposefully avoiding payment obligations and choosing not to engage with the ATO.
• Setting clear expectations for businesses about what they need to do – and the consequences of not doing it.
• Targeting businesses that have “capacity to pay”.
• Adopting different collection strategies for different types of businesses.

At the same time, the ATO said it would invest resources to ensure employers met their superannuation obligations. This would be done by:

• Increasing its use of data to monitor small businesses.
• Encouraging businesses to become more digitised.
• Using 'nudges' to prompt businesses to self-correct mistakes.
• Being more proactive about contacting businesses that aren't meeting their obligations.