Indirect tax non-compliance can result in significant penalties, reputational damage, and disruptions to business operations. Here’s how you can minimise the risks of non-compliance:
Stay Updated: The indirect tax regulations can be complex and change over time. Therefore, it’s important to stay updated with the latest changes and updates by regularly checking the ATO website, attending seminars, or subscribing to industry newsletters.
Engage Experts: If you lack the in-house expertise, consider hiring or consulting with a tax specialist, particularly one with experience in indirect taxes.
Invest in Software: There are many software solutions available that can help in managing and calculating taxes. Some software can be integrated with your accounting system to automatically apply the correct tax rates and generate reports.
Regular Audits: Conduct internal audits of your indirect tax processes to identify and rectify any issues before they become significant problems. You can also consider having external experts conduct periodic reviews.
Training: Ensure that all staff involved in finance, accounting, or other areas that touch on indirect taxation are adequately trained. This will reduce the chance of human error.
Document Everything: Keep detailed records of all your tax-related transactions. This can be crucial if you ever need to prove your compliance to the ATO or if there’s ever a dispute.
Understand Your Obligations: Ensure you understand which indirect taxes apply to your business operations (e.g., Goods and Services Tax, Luxury Car Tax, Wine Equalisation Tax) and ensure that you comply with each of them.
Timely Reporting: Make sure that all reports and payments are submitted to the ATO on time. Late submissions can result in penalties.
Use ATO Tools: The ATO provides various tools, calculators, and guides that can assist businesses in ensuring they comply with indirect tax obligations. Make use of these resources.
Clear Communication Channels: Ensure you have clear communication channels with your suppliers, customers, and other stakeholders about any indirect tax obligations. This can help in avoiding any misunderstandings or misinterpretations.
Feedback Mechanism: Encourage your staff to report any inconsistencies, doubts, or potential non-compliance issues. A proactive approach can prevent many problems.
Review Business Changes: Whenever there’s a significant change in your business operations, like entering a new market, launching a new product, or altering your supply chain, review the potential indirect tax implications.
Engage with Industry Associations: Being part of industry associations can provide you with insights, updates, and advocacy related to tax changes and best practices.
By adopting these practices and staying vigilant, you can significantly reduce the risks associated with ATO indirect tax non-compliance.
BTG can help.
BTG International has helped some of the worlds most respected companies prepare for and/or manage an Indirect Tax review. Call us on 1300 650 258, email contact@btgi.com.au or leave your details and we will be in touch.
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