The ATO has revealed plans for more digital initiatives to tighten up the tax collection regime for small businesses.

Just weeks after announcing expansions to its data matching regime, the ATO has revealed plans for digital measures designed to “encourage” small businesses to pay their taxes more frequently.

The ATO is yet to reveal details about the new digital tax collection measures. However, Commissioner of Taxation Rob Heferen, who revealed the plan at a recent Australian Chamber of Commerce and Industry (ACCI) event, said it would involve embedding more business rules into accounting software and increased use of data through small business benchmarks.

“We have been working with small business, tax professionals and digital service providers to consider a fully digitalised tax system,” Mr. Heferen said.

“In this future, small business can get their tax right from the start, allowing them more time to focus on their business and less on tax,” he added.

Tax collection gap slowing but problem persist

The ATO is chasing a tax collection shortfall valued at up to $100 billion and it estimates that the proportion of that due immediately is worth up to $50 billion.

These shortfalls or “gaps” in its tax collection income were identified as part of its Random Enquiry Program (REP). The REP identified a $AU10.2 billion collection gap for the for the 2021 financial year – roughly 6.3 per cent of all revenue.

Mr Heferen said that while the debt had begun to grow more slowly, some businesses were still struggling to pay and avoiding measures to meet their obligations such as payment plans. Others, he said, were “deliberately concealing their income in the shadow economy”.

“Firmer and faster” on unpaid tax

“You can expect that we will be firmer and faster in dealing with unpaid GST, PAYGW and super. We will be looking more closely at remissions and deferrals and will tighten up payment arrangements.

“And for the small number of businesses that operate in the shadows we will continue to focus our efforts on using data and industry insights to improve our detection and prevention strategies,” he said.

Building on data-matching expansion

Earlier this month, the ATO announced expansions to its data-matching program to include data from lifestyle asset insurers and property management software providers.

It said it would include insurance policy data for the financial years 2024 to 2026, reaping up to 2.4 million records. The expanded landlord compliance program was expected to involve data for 2.3 million individuals for the financial years 2019 to 2026.