The Australian Taxation Office (ATO) has just released their Building Confidence tax compliance program to highlight where they will be directing their attention and their recent tax compliance improvement results.

In particular, the ATO appear to be ramping up their activity in the area of employment tax compliance, with almost:

  • 20,000 employer obligations audits conducted in the 2014 income year, generating over $800 million in additional tax and penalties; and
  • 19,000 employers being checked to ensure they are meeting their superannuation guarantee obligations, resulting in over $385 million in superannuation guarantee charge liabilities and the issue of director penalty notices in respect of 1,400 companies.

The ATO is looking to expand their employment tax compliance activity for the 2015 income year and beyond, featuring increased reliance on the use of benchmarking and trend analysis techniques and the data matching of information and business intelligence obtained from a wide array of external sources. 

In particular, the ATO has indicated that they will be focussing their attention on the detection of the following instances where various employment tax obligations are not being satisfied:

  1. Purported contracting arrangements under which employees are incorrectly being treated as independent contractors; and
  2. Failure to withhold PAYG tax from, and pay superannuation on, employee cash remuneration and the non-reporting of fringe benefits, including the failure to lodge Fringe Benefits Tax (FBT) returns.

The Building Confidence tax compliance program suggests that the likelihood of an organisation receiving attention from the ATO on the employment tax front is increasing.  Therefore, we recommend that employers examine their overall level of compliance with the tax laws in this area to ensure they are prepared should the ATO come calling.