SMEs wary as ATO grants big business 12-month reprieve to confess tax problems

Members of the small business community have urged the federal government not to take its foot off the pedal in its efforts to improve tax system transparency, following the revelation that some of Australia’s largest private companies will be granted more time to notify the tax office of tax problems. 

Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany this morning the federal government, and the Australian Taxation Office (ATO), have been “very strong” in efforts to promote tax transparency over the past three years, for companies of all sizes, however they must be careful now not to “send a message they are backing off”. 

“The tax area concerns everyone, not just small business,” Strong says. 

“Tax is not debatable, tax has got to be transparent, [and] transparent for everyone.”

Strong’s comments come as the ATO has confirmed the extension of its ‘reportable tax position’ program to large, privately held companies has been delayed. 

The program currently applies to large, public companies and requires them to complete an annual questionnaire about potential tax problems, including those related to tax disputes, cross-border tax arrangements or research and development deductions. 

According to The Guardian, the program was due to be extended to privately held groups with annual income above $250 million at the end of the current financial year. 

However, this extension will now be delayed by 12 months, and will come into effect in 2021. The delay was reportedly discussed at a consultation meeting of the ATO’s Private Groups’ Stewardship Group in September, which was attended by representatives of some of Australia’s wealthiest families, as well as lawyers and tax advisers.

A spokesperson for the ATO told SmartCompany this morning the decision to delay the proposed extension of the program followed consultation with the stewardship group, as well as broader industry consultation via a consultation paper. 

“Concerns were raised in feedback about implementing the RTP [reportable tax problems] schedule in the private market this financial year,” the spokesperson said.

“Reflecting on the feedback received, it was apparent that not only would it be difficult for large private companies to satisfy RTP Schedule reporting obligations for a full financial year that had already commenced, it would also be difficult for the ATO to administer RTP Schedule reporting that started part way through the financial year.”

The spokesperson said the ATO is now working with industry groups and advisers to private companies to “co-design the implementation of the schedule”.

“We want to ensure large private companies and corporate groups understand their RTP obligations and have ready access to information that will assist them to complete the RTP Schedule from 1 July 2020,” they said.

Strong says it may well be the case that the delay in implementation is necessary, however, if so, this should be explained. 

“If there is an issue, that’s fine,” he says.

“Tell us what it is, why there had to be an extension, so nothing is being hidden, no games are being played.”

Strong says COSBOA continues to have “huge concerns” about some large corporations not paying their fair share of tax, particularly multinationals, and points out that, for the most part, small business owners cooperate with the ATO when questions are asked about their tax affairs. 

“When they want something from small business, we don’t argue,” he says. 

“It’s a two-way street. We want to get paid on time, so does the ATO.”

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