Small businesses are located in a wide cross section of the economy’s business sectors and are geographically spread in an equally diverse way: Two-thirds of small businesses are home based; one-third of business operators are born overseas; and 39% of small businesses operate in regional Australia.3
More than 60% of small businesses are in property, business services, construction, finance, primary production and retail.4 They are also an indispensable part of the export sector – small businesses make up around 42% of Australian exporters.5
Small business operators whose skills may be in a completely different area often need a high degree of self reliance when it comes to dealing with accounting and regulatory requirements including taxation. So the more assistance we can give you, the better chance you have of getting it right first time.
We provide a range of products and services to help small businesses, and our most popular products are listed as follows.
Our 2007-08 Corporate Plan provides a focus to “increase certainty for small businesses and people new to business”. We are calling this initiative the ‘Small Business Assistance Program’.
The program aims to help businesses get on the right track from the start and develop good habits in relation to their tax obligations early. It also seeks to help established businesses who need assistance but have been reticent to seek this from the ATO.
As part of this program we will also encourage and help small businesses to deal with us electronically, using products such as e-Record, our free electronic record keeping software and over the internet (through our Business Portal). As well as providing you with a practical step by step guide as to how you can deal with us online, we’ll come over and hook you up if you are having difficulties getting started.
In collaboration with small business bodies and industry, we’re developing a range of innovative approaches, including more effective and personalised assistance.
A Federal Budget allocation of $40 million over the next four years will complement our plans for a fresh approach to helping small business meet their tax and superannuation obligations. The focus is on keeping it simple for the vast majority of small businesses who really need it to be that way.
We are consulting with COSBOA, its members and other organisations with an interest in small business to help us co-design our Small Business Assistance Program. A strong relationship with small business groups such as COSBOA enables us to keep an ear to the ground, to address difficulties as they arise and plan for the future.
We will provide practical assistance that is relevant to business at various stages of their development. The program will be developed in consultation with business representatives, such as COSBOA, and tested with business operators.
Assistance and advice will be available to businesses on start up and at various other points in the business life cycle – for example, at the stage where a business decides to take on employees, registers for GST and, in particular, if a business is having difficulties in meeting obligations.
Delivery will include a mix of personal assistance visits, seminars, workshops and telephone support. We’ll engage more with local industry groups, business assistance centres and chambers of commerce to ensure small businesses get the help they need, and how they need it. Businesses that deal with us rate us highly, but if you are worried about approaching us, we are happy to help you through your industry or local business associations.
New starters
A key focus of the program is to help new business operators get off to a good start.
We are keen to establish relationships with businesses in their formative stages, so we plan to contact new business operators and offer them practical assistance with important tax basics including record keeping, completing activity statements, Pay As You Go obligations and so on.
To new business operators, we say, please, take the time to find out how the tax system works for your business. We’re here to help you and it will save you time (and possible grief) in the long run.
We’ll also help you learn how to use Tax Office electronic tools and calculators and products such as e-Record which can take the hassle out of record-keeping and help you produce and lodge a business activity statement. There are about 37,500 registered e-Record users and the Tax Office distributes about 130,000 copies of e-Record each year. For those that use more sophisticated record keeping software, we work closely with software developers to help them keep their products up-to-date.
Assistance visits
Another feature of the program will be a new approach to our popular assistance visits. We plan to offer a more personalised approach to better meet the needs of the particular small business, such as providing practical help and advice on record keeping, completing the BAS, super guarantee or how to install and use the Business Portal.
In 2006-07, we made around 5000 assistance visits and nearly 20,000 educational calls to new businesses. We received much positive feedback about the service. One business operator rang us as soon as our adviser had left to say thanks for the best service the Tax Office had ever offered to taxpayers.
Another advisor went to visit a small business operator and found the whole family there to sit in on the session. They all operated small businesses and wanted to listen in to make sure they were doing the right things. Like many small business people, this group were very happy with e-Record.
Prevention is better than cure
We know that running a business can be complicated and that it can be difficult for small businesses to stay on track. Our approach is that prevention is better than cure. It’s about engaging with businesses as early as possible to help them stay on track and ensure that any problems, such as debt, do not escalate and become unmanageable6.
To that end, we’ve put together a short list of tips for small business to help keep you on the right track. This brochure is available at our ATO stand today and is also published on our website. As the brochure points out, if you have made an honest mistake, it can usually be corrected without unnecessary angst.7
The clear message to us from small business is that you want easier, cheaper, simpler ways to deal with your tax obligations and that’s what we are working to provide. You’re not looking for a binding legal treatise, you’re looking for practical, step by step guidance.
Our plan to give the community the very best tax administration in the years ahead is set out in the Tax Office’s 2006-10 Strategic Statement.
The tax administration of the future should reduce the cost of compliance for small business, allowing more time for getting on with business.
Our priority is to improve our support services to small business, especially those entrepreneurs who are just starting out.
Improvements for the future include:
- assistance will be more practical, designed and delivered in collaboration with industry and local business bodies; and our letters will be clearer
- small business will have greater access to information online and real-time services
- we’ll put more effort into helping business to get tax matters right from the outset, rather than waiting till they get it wrong
- when you contact the Tax Office, you’ll get better service as our staff will be able to view your whole taxation history and have a better understanding of your circumstances
- integration of web services into business accounting software will allow activity statements to be prepared, lodged and validated direct from your software
- businesses will face lower costs in reporting to government due to reduced duplication, increased government-to-government data sharing and a reduction in unnecessary reporting.
Some of these initiatives are already underway and some are still being developed. However, when you put them together, it paints a picture of significant change and improvement.
We are improving our written correspondence, by taking a fresh look at the content of our letters while reducing the number we send.
User research is underway to test our letters with business people and tax practitioners.
We recognise that a letter may not be the best way to communicate with a taxpayer, with many preferring us to contact them by phone, email or even a text message.
Another priority is keeping pace with technological developments. Our counterparts in the Canadian Revenue Authority are doing cutting edge work in converging web and voice technologies. Canadian taxpayers can browse their website and if they see something they don’t understand, they can click on a link that allows them to request that the revenue department ‘call-back’ at a specific time to assist with their query. This feedback is also used to re-write the web content.
Another focus is making our website more user-friendly through content reviews and improvements to the search engine.
The benefit of having taxpayers’ histories available is that we have richer information so we can differentiate our responses to best meet a taxpayer’s circumstances. We can look at a taxpayer’s record and compliance efforts and reflect this in our decisions about extensions of time to lodge or pay, and remissions of interest and penalties.
There are a range of improvements underway for the Business Portal. You will be able to lodge and amend PAYG and GST quarterly instalments through the Business Portal from September 2007. This means you will be able to complete all your activity statements online.
You will also be able to download personalised payment slips for use with BPay, Australia Post and the Tax Office.
Over the coming years, our Business Portal will be redesigned to allow you to do more business online, such as submitting your tax return and amendments. You’ll be able to view real-time information on accounts, registrations, payments, lodgments and amounts due and paid. There will be a single running balance account and improved statement of account.
Tax Office staff will see information presented the same way as it is to portal users, making it easier when we discuss issues by phone. You’ll be able to see the status of your electronic enquiries and lodgments.
On-screen tools will guide you through the new screens and an obligations calendar will let you check when lodgments are due.
We are also supporting the Government’s Standard Business Reporting initiative which aims to cut the volume of reporting by business to government and introduce a single set of data that businesses would need to give to government. A related initiative is the adoption of standard business reporting language (XBRL).
In the future, more business people using commercial accounting software to track their financial and personnel information will be able to use web services to conduct transactions with the Tax Office and other agencies.
For example, when a business reconciles its financial statements at the end of the month, the software could also generate the BAS and potentially the payment. When a business adds a new worker to their personnel records, the software could automatically submit the tax file number declaration information.
Let’s take a look at this brief video (MPG, 19.3MB) for an idea of how dealing with the Tax Office might look in the future.
In this dynamic economic and technological environment, taking reasonable care is all that anyone can ask. We are committed to supporting those small businesses that want to do the right thing, allowing them to get on with their business with minimal hassles on a more level playing field.
We have an ambitious program for working with small business aimed at reducing your compliance costs and anxiety levels. Its success depends on your continuing involvement.
1 Of the total 2.4 million businesses in the micro business segment, around 300,000 are small superannuation funds and 200,000 are trusts, Compliance Program 2006-07.
2 Australian Taxation Office, Compliance Program 2006-07, Canberra 2006
3 Department of Industry, Tourism and Resources, Encouraging Enterprise, Canberra, 2006
4 Australian Taxation Office, Compliance Program 2006-07, Canberra 2006
5 Department of Industry, Tourism and Resources, Encouraging Enterprise, Canberra, 2006
6 Taxation debt is a significant and growing problem in Australia and micro-business debt is a particular compliance management problem for the ATO. In fact, micro-businesses account for more than two-thirds of the value of all collectable debt. In the ANAO's recent report on our administration of debt collection, they recognised the positive steps we have taken in administering debt collection, in terms of innovation in strategy, infrastructure and governance frameworks (see Commissioner's Online Update on `Collecting taxpayer debt and outstanding employee superannuation entitlements'). However, we acknowledge that we need to become even more sophisticated in our approaches. We are looking to expand our debtor research and analysis so that we can identify taxpayer segments that are likely to fall into debt and provide early assistance and intervention.
7 Helping small business stay on track.
Last Modified: Friday, 6 July 2007
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