In a recent seminar for members of the Chinese community on SME Business Protection, Tania Waterhouse, taxation and superannuation specialist, gave helpful tax tips.  Tania focussed on the many tax issues arising in the SME market.

Tania discussed the tax advantages of company and family trust.  She also stressed that one of the disadvantages of a sole trader or partnership is if the business fails, the sole trader, or individual partnership is personally liable for all of the unpaid Pay As You Go (PAYG) and Superannuation guarantee payments that the business owed.

Tania also discussed the type of information available to the Australian Taxation Office (ATO), particularly through Austrac.  She highlighted the power of the ATO to obtain information from banks.

One particular problem for taxpayers is where they inflate their earnings in order to obtain a mortgage.  Tania cautioned that where there is a discrepancy between what a taxpayer has told the bank and the income level that they have disclosed, the ATO will accept the amount shown in the mortgage application and treat the discrepancy as undisclosed taxable income.

Many Chinese parents gift large sums of money to their children in Australia.  Tania emphasised that AUSTRAC would pick up all monies that are transferred into Australia into a Chinese resident bank account.  The ATO will initially treat these transfers as undisclosed income unless the Chinese taxpayer can show that they are in no way related to the source of those funds.

Tania also referred to the ATO performance benchmarks which show what a typical business should be disclosing.  This was of particular concern in the areas of hospitality, hairdressing, discount stores where many taxpayers were not disclosing all of their taxable income.

Comment:  If any of these issues affect you, please contact us so that we can help negotiate the tax minefield.