Did you know that the Australian Taxation Office (ATO) uses what is called a “benchmark” when deciding whether or not to audit a business. ATO computers automatically generate a list of all taxpayers who do not meet the benchmark. There is a strong possibility that these taxpayers will be audited.
These are the average floral benchmark figures for 2014.
|Turnover:||65,000-$300,000||$300,000-$600,000||More than 600,000|
|Average cost of sales||47%||48%||49%|
|Average total expenses||84%||88%||90%|
Thus, if you take a husband and wife partnership who run a florist with a $1 million dollar turnover, the ATO considers that the average total expense is approximately $900,000. This means that the business has approximately $100,000 income. Thus, the husband and wife should be declaring approximately $50,000 each. Don’t forget this is only an average.
A florist not coming within the benchmark is more likely than most to be audited.
So the message is, be prepared:
If you are audited, you should engage an experienced tax lawyer who can help negotiations with the Tax Office.
As the former owner of Kavelle Flowers in Sydney, and now the owner at Waterhouse Lawyers, Tania Waterhouse understands better than most the problems faced by florists in maintaining proper taxation records. Tania also has strong connections with the Tax Office and uses these to achieve the best possible result for you. Tania has an excellent track record – she has been achieving outstanding results for her clients who have been audited.