Trading stock taken for private use
It is common in a number of industries for trading stock to be used for private purposes. If you do this, you are treated as having sold it for its cost just before you use it and as having bought it back for the same amount.
Because it is difficult in many cases to keep accurate records of transactions involving goods taken from stock for private use, the ATO publishes each year standard values (excluding GST) that can be used by proprietors of certain businesses. The latest amounts (for the 2020–21 tax year) were published in early January.
|Type of Business
||Amount (excluding GST) for Adult/Child over 16 years
||Amount (excluding GST) for Child 4 to 16 years old
|Takeaway food shop
|Mixed business (includes milk bar, general store and convenience store)
(Table taken from Taxation Determination TD 2021/1)
The ATO regularly receives data relating to the purchase and sale of properties from State and Territory revenue offices around Australia.
Where property transfers are made by businesses, they are potentially taxable, and the ATO matches this information against what has been reported on activity statements. If you sold property and did not include it in your activity statement, the ATO may contact you. You will be asked to review your records and revise the relevant activity statement, without penalty, by a specified date.
Tip! Talk to your tax adviser if you have sold property.
Online sales – data-matching
The ATO will acquire data on Australian sales made through online selling platforms through to 2022–23. The collected data may include business names, ABNs, addresses (e.g. business, postal and email), contact details, account names, account registration information and the number and value of monthly and yearly sales transactions.
The ATO estimates the total number of account records obtained will be between 20,000 and 30,000 each financial year. It expects around half of the matched accounts will relate to individuals.
These records will be electronically matched with ATO data holdings to identify non-compliance with registration, lodgment, reporting and payment obligations under taxation laws.
Tip! If you have online sales transactions, talk to your tax adviser to make sure you are complying with all your taxation obligations.
Vehicle registrations – data-matching
The ATO will acquire motor vehicle registry data from State and Territory motor vehicle registry authorities through to 2021–22. The collected data may include identification details (e.g. names, addresses and ABNs) and transaction details (e.g. date and type of transaction, sale price of the vehicle and market value of the vehicle).
The ATO estimates that records relating to approximately 1.5 million individuals will be obtained each financial year.
The data will be acquired and matched to the ATO’s internal data holdings to identify relevant cases for administrative action. For example, the data may be used to identify taxpayers buying, selling or acquiring motor vehicles who are at risk of not complying with their taxation obligations. That could be a licensed motor vehicle dealer who may not be complying with luxury car tax obligations or a business with little reported income buying a very expensive vehicle.
Don’t forget that if you are contemplating buying a new car for your business (e.g. to take advantage of full expensing), your deduction cannot exceed the car limit ($59,136 for 2020–21).
Tip! Buying a car for your business can have various tax implications, e.g. depreciation, GST and FBT. If you are contemplating buying a car, discuss the potential tax implications with your tax adviser.
The ATO has publicised a number of successful prosecutions for tax fraud, presumably to remind taxpayers that dishonesty does not pay.
In one case, a concreter from New South Wales was fined for making false and misleading statements.
The concreter originally lodged his 2017 income tax return via a tax agent, but he lodged an amendment via myGov four months later. In the amendment, he falsely claimed he had worked for a second employer, where he received wages and had tax withheld. He also reported additional amounts for work-related expenses and the cost of managing tax affairs.
The false claims would have given the concreter a $7,974 refund, but an ATO audit revealed the truth.
He was fined $2,000 and ordered to pay a further $5,000 directly to the ATO. He was also placed on a 2-year good behaviour bond.
In another case, a Queensland bricklayer was sentenced to 2 years and 6 months in jail for evading nearly $100,000 in tax.
Over the course of a year, the bricklayer reported sales of $85,359 in his quarterly business activity statements (BAS). But an audit found he had actually received more than 4 times this amount, resulting in a GST shortfall of $26,570.
Data from the taxable payments reporting scheme (TPRS) also showed that he had quoted the ABN of his bricklaying trust to a number of entities, despite telling ATO officers it was no longer trading.
In addition to this, the bricklayer understated income on his income tax return, which caused a tax shortfall of $70,441.