Here to help?

We all know the line about the tax representative who visits your business and assures you that “We’re here to help you”. As the Independent Contractors of Australia say, albeit that they are partially funded by the Australian Government:

“It’s enough to keep you awake at night! If you’re self-employed, the Australian Taxation Office says that it understands your business perhaps better than you do. It has profiled the financial ‘norm’ for a huge number of small businesses and if your tax returns don’t fit within the profiling, you’re likely to receive an audit. They’re pretty smart these tax people!”

The ATO has profiled hundreds of small business, indicating the sales turnover of low, medium and highly successful enterprises and calculating reference benchmarks to let the fiscal fiend compare your business during the recession against benchmarks for its industry in better times, to target business owners for audit or review.

The benchmark information they draw from your best year average performances are used to track small businesses income and expenses within ranges. Where businesses do not report within these ranges it rings a bell that may indicate you are not recording and paying tax on all transactions, especially cash transactions.

This is an interesting approach given that Gary Morgan says that consumer confidence it starting to turn down again and business analysts are concerned that the RBA is about to slam on the inflation breaks as Wayne and Lindsay start to listen to calls to cut back the stimuli. It raises the question whether the Commissioner has taken into account the impact of the global financial crisis on last year’s results.

If you want to know more about all of this go to the Independent Contractors site where you can find out how your business stacks up. As they say: “maybe you’d like to check out the profitability of a neighbour’s business! Actually the profiling would be excellent research for comparing how your business is performing against a standard, or fabulous information if you’re looking at going into business for yourself.”

This pattern of the Government using your BAS (Business Activity Statements) and income tax as a form of social control of small business is in stark contrast with the approach of the Obama Administration that has been pressuring banks and government agencies to find ways to increase lending and terms of trade to small business.

The banks don’t like to admit that they are not only risk averse but down right reluctant to give the same level of credit assistance to growing small enterprises and recovery initiatives that they have received from the TARP programs.

Maybe the Minchin, Brown, Xenophon and Fielding team that forms Australia’s collective POP (Permanent Opposition Parties) could take a leaf out of the US Congress book and focus their attention on giving a hand to contractors and small business owners through an appropriate use of Senate Committees.

As talks on economic recovery legislation continue, a key Congressional Committee invited representatives of small businesses weathering the economic recession to advise what help they required to lead the nation toward economic recovery. As the backbone of the economy, creating 80% of all new jobs and driving innovation in virtually every field, small businesses was seen to have a vital role in the nation’s economic turnaround.

Entrepreneurs from a wide range of economic sectors appeared before the Committee to discuss how various policies could contribute to economic growth and recovery. Industry experts testified to how infrastructure projects not only benefit companies that obtain contracts for public works, but also discussed how strengthened infrastructure can promote the nation’s long term economic health.

“Small businesses will be instrumental to our nation’s economic recovery,” said Congresswoman Nydia M. Vel