Are you at risk?

What areas of your business expose you to potential risk?

The vast majority of business people will detail risk areas including products, staff and OH & S. They will, however, rarely identify taxation management as a risk area.

Each year, the ATO releases its compliance program which outlines their major focus areas of audit and review to assist taxpayers in managing their risk exposure. It should however be part of the business’ operational management that issues around tax risk are mitigated as much as possible.  This process will assess the business’ exposure to those matters identified by the ATO each year and ensure that processes and procedures are established by the business and its advisers to protect the business should they be subject to an ATO rview or audit.

The process need to not be overly cumbersome, but will, by necessity, reflect the style, size and complexity of the business.  It is very imortant that any risk management strategy will also deal with “unusual” transactions that are undertaken by the business including asset purchases and sales and (especially) remuneration of senior employees and proprietors.

One of the benefits of implementing a tax risk plan is that it will enable the acquisition of information on a timely basis as transactions occur.  This will help protect the business should staff leave or die between the occurrence of the transaction and a subsequent review/audit.  The “we don’t know or can’t remember” argument is not one that holds weight when arguing with the Tax Office.

So, your risk management in your business needs to be cognisant of your tax position and records as this is an area which most businesses fail to consider.

Are you at tax risk?

Just how comfortable are you that all your work is being done correctly and you’re not getting to a place where your business is falling foul of things?

Many people believe that they are being well served by their professional advisors because, well, they’re professional advisors. Sort of like saying I know they’re good because I say so!

In many cases, this is not quite right. We’ve seen numerous occasions where a potential customer has approached us with a view to doing their work.  The thing is that we will find (usually) a raft of issues where there are significant omissions from their reporting/tax. I’ll give you some examples:

•  a medical specialist who came to us – he was structured completely incorrectly – we sorted that out and realised a saving of $16,000 for him EVERY YEAR from then on;
• a customer who approached us about doing their work – they have a number of commercial buildings on which their then accountant wasn’t claiming the depreciation – cash savings to him of around $25,000 per year EVERY YEAR from then on including amendments for previous years getting them tax back; and
• customers who came to us to review their situation – we were able to implement strategies which gained them about $10,000 tax back for previous years and enabled them to get additional deductions EVERY YEAR from then on.

In all cases, these people were using advisors who they believed were doing their work correctly – they were, it’s just that they weren’t thinking about things as we do with the consequence that they were paying far more tax than they needed to be.

We don’t pretend to be the stars out there – it’s just that, based on our experience, we see a lot of opportunity to do high value work for people where they haven’t been aware of what they can be doing.

So have a think about what you (and your advisors) know and don’t know – odds-on there are a range of unknown unknowns out there that are potentially costing you money.

Time is fast running out for people who may be eligible for the tax bonus payment to lodge their 2007–08 tax return.

Tax Commissioner Michael D’Ascenzo said there are less than two weeks left for people who think they are eligible for the payment to lodge their return so they must act now.

“More than 8.4 million people have already received their tax bonus payment but we think there could be up to 280,000 people yet to lodge who could be eligible,” Mr D’Ascenzo said.

“If you don’t lodge your return by 30 June 2009 you will miss out on the payment.

“You can lodge your 2007–08 return by mail using TaxPack 2008 or through your tax agent or accountant.

“If you do lodge your 2007–08 return before 30 June, and you’re eligible for the bonus, you’ll get your notice of assessment in late July and the tax bonus payment should arrive in August.”