Who the ATO defines as the SME market:
There are more than 600,000 taxpayers in the SME market. In 2010-11, the ATO collected $272.97 billion, about $74.7 billion of which came from the SME market. The ATO breaks the SME universe into three segments:
1. Individuals with an estimated net wealth of $30 million-plus.
2. Individuals with estimated net wealth of between $5 million and $30 million.
3. SMEs with turnover of $2 million to $250 million.
‘Characteristics’ that attract the ATO’s attention
- Tax performance varying substantially from business performance
- Inconsistencies in activity statements or spikes in refund claims
- Large, one-off or unusual transactions
- Tax and economic performance varying significantly from similar businesses
- Unexplained losses
- A history of aggressive tax planning
- Weaknesses in compliance structures, processes and approaches
- Tax outcomes inconsistent with the intent of tax law
- Lifestyle not supported by after-tax income
- Private assets treated as business assets
- Business assets used for tax-free private use
- Dealings with overseas entities, especially low-tax jurisdictions and tax havens that allow banking secrecy, not disclosed
- Use of complex structures and intra-group transactions to minimise tax
- Transactions where the tax and economic outcomes are inconsistent
- Poor governance and risk-management
- Distortions and inconsistencies in market valuations and apportionments
- Performance that falls outside small business benchmarks