How does the ATO target cafes?

The ATO’s Focus on Cafes and Restaurants

At Black Market Roasters, we seek advice of professionals who are experts in their fields. David Hoyle of DR Accounting talks us through a recent industry development.

The cash-economy continues to be a focus for the ATO in their bid to minimise tax evasion. Cafes and restaurants are a key target for surveillance with 42% of businesses in the industry rated as higher risk of not correctly meeting their tax obligations.

According to the ATO nearly 30% fail to lodge their activity statements on time and the industry is reported to have the second highest level of community concern about potential tax evasion.

While greater monitoring is a positive outcome for the majority of businesses in the industry who are honest taxpayers, an unexpected audit can be a complex and lengthy process that requires dedicated resources to manage and will take your attention away from running your business.

Who is being targeted?

• Businesses that serve food and beverages on their premises
• Food service operators that mainly provide catering services at specified locations or events
• Businesses primarily selling fast food, including mobile food vans and milk bars.

Recent figures show 5,681 businesses in the sector report income and expense amounts significantly outside the key small business benchmark ratio for the industry. The ATO uses these benchmarks as an indication that a business is potentially not paying the right amount of tax and super contributions, putting you at higher risk of audit.

What do I need to do?

1. Invest in an accounting system that will that will help you manage your legal requirements and reporting obligations.

2. Regularly review your business benchmarks against the ATO industry benchmarks.

3. Make sure that you stay on top of your superannuation requirements.

David is a qualified accountant and has had years of experience in dealing with food and beverage clients. http://www.drhoyle.com.au