Throughout September the Tax Office have advised that they are doing an ‘educate and assist’ mail out to small businesses where the main earner of the business is the business owner. The ATO are concerned that some business owners and indeed their accountants are getting the income classification wrong. It doesn’t sound like much of a problem and from what we have seen here at Boston Accounting with our new clients is that in previous years either they or their previous accountant hasn’t worried too much about the business income classification. This is a major problem!
When the ATO undertake these education mail outs it means that they will be looking closely at small business and will be taking action to recover unpaid taxes. Sounds unfair but that’s how it is.
If you use an accountant who is not with the Boston Accounting group and you haven’t heard of the Personal Services Income (PSI) rules then it would be in your best interest to understand the rules. If your accountant hasn’t quizzed you about your business recently or you appear to be just another customer to them, well you really need to call us today. Who is preparing your financials and tax return anyway? The partner? or a junior accountant (or even a trainee)?
Here is the ATO link to the mail out advice:
http://www.ato.gov.au/content/00302848.htm
Will you be affected? Don’t be caught out.
