Every few years the Australian Taxation Office (ATO) decides to change how they look at professionals in business and their compliance. This year, the ATO will be putting into place new guidelines, which are currently being drafted, that will take effect from the 1st July 2021. The ATO has stated this new approach will pay particular attention to accountants, architects, engineers, financial service advisers, lawyers and medical practitioners.
In typical ATO fashion, there is a complex process to work out the risk that professionals have from a compliance perspective.
Here at PCR, we’ve created a method that allows us to calculate a score to determine your risk profile based on where you fit in the ATO traffic light system. Green is low risk, Amber is medium risk and Red is high risk. Thankfully, we have gone through the new tax guidelines in detail and are ready to start assessing you under the new system.
As you might have suspected, you’ll want to be in the Green zone. Thankfully, there is still plenty of scope to manage your tax and maintain your business and compliance in the Green zone. On review of the guidelines we expect all our clients to be in the Green zone.
Whilst being in Amber or Red zones doesn’t necessarily mean that you are doing anything wrong, it does mean that you’re a lot more likely to be reviewed or audited by the ATO. As an example, the way the scoring is structured means it is possible that if you’ve had a reduction in your income due to COVID-19, you might fall into Amber for the last financial year under these guidelines. When your income recovers you are likely to fall back into the Green zone.
The key is to have an assessment done to find out where you sit. We will be doing this for all our professional clients in business. Should we find that you aren’t in the Green Zone we will provide recommendations to get you there before the 1st July 2021. For our clients we will be preparing your risk assessment in conjunction with your tax planning for the 2021 financial year.
If you aren’t a client of PCR and are a professional in business, you need to make sure that your risk is assessed from these guidelines as that will determine the chance of you having a review or audit from the ATO.
For many business owners, the end of the financial year is one of the most stressful few weeks on the calendar, but it doesn’t have to be. With the help of PCR Accounting & Advisory, you can ensure your business is in the best position possible. We help you make sure superannuation is paid, necessary equipment and materials have been purchased and avoid any unwelcome surprises so you can feel prepared for tax time.
If you need help with lodging your company tax return with the tax department, contact our tax accountants at PCR Accounting & Advisory on 03 9847 7516.
Owner of PCR Accounting & Advisory, Peter Marmara-Stewart is a top-tier accountant and financial advisor dedicated to helping clients reach their business goals and achieve financial freedom. Peter is highly regarded for his client-focused approach and entrepreneurial spirit, catering to a diverse range of professionals across a wide scope of industries all across the country. Peter’s expertise can help you plan effectively, set goals, maximise profits and protect your assets. Get in touch today on (03) 9847 7516.