Dec 6, 2022

ATO’s relationship with small business

Second Commissioner Jeremy Hirschhorn delivered the Commissioner of Taxation’s Address at the Institute of Public Accountants National Congress on 18 November 2022. The theme of the Address was how the Tax Office can help small businesses thrive and survive.  The Address is available on the ATO website.

The current environment Second Commissioner Hirschhorn said that the ATO understands that small businesses are a critical component of the Australian economy.

“They provide localised and tailored services, employment for their local communities; in short, they are a pillar of their local economies. But they are also a key element of the social fabric of a local community. They not only provide a service, but they give the community its character and its vitality. They are also contributors to their communities in a broader sense through the tax system: from employment taxes, to GST, to their own income tax.”

Some of the statistics mentioned in the Address include:

At 30 June 2022 there were 4.5 million active small businesses.

Around 730,000 small business employers employ almost 7 million employees.

Those 4.5 million active small businesses, together with a further 2.1 million individuals linked to small businesses, account for $68 billion in income tax (around 17% of the income tax collected by the ATO).

They also contribute over $19 billion in GST (about 28% of total GST). Going digital A key focus area in this year’s ATO Corporate Plan is “to improve small business tax performance and participation by collaborating with partners to build a digital first tax ecosystem, enabling seamless tax and reporting from business source systems”. The ATO strongly supports eInvoicing as a micro-economic reform assisting business, especially small business – more than 23,000 businesses are already taking advantage of eInvoicing, which makes business transactions easier and fairer, and less prone to scams (such as email take-over scams).

Addressing tax debt and payments Second Commissioner Hirschhorn said that although the ATO has an obligation to collect what it is owed, the ATO is committed to engaging with taxpayers and is offering tailored support and assistance to those with overdue debts. All the assistance the ATO provided during the height of the pandemic remains, including deferrals and payment plans.

Other topics covered include: minimising the impact of ATO errors; making it fairer for small businesses in a dispute with the ATO; protecting small business from unfair competition; and cyber threat.