The Australian Taxation Office (ATO) has been taking a closer look at the hair and beauty industry (don’t worry, you’re not in trouble!) and has found some interesting stats that take the temperature of the current industry and pave the way forward. Significantly, the ATO discovered as of September last year that up to 58 per cent of businesses are potentially cash only – presenting risks to businesses meeting their tax obligations (and bringing their business into the 21st century).
H&R Block’s Director of Tax Communications, Mark Chapman, outlined the tax concerns of this stat, and advised that if businesses are operating without cashless transactions, that they keep meticulous records of all sales and services.
“The ATO uses a benchmarking system to compare businesses with similar businesses,” he explained. “This shows what your expected turnover, expenses and profit margins should expect to be. If you’re outside the benchmarks, that is often a flag for the ATO to take action.”
The ATO has been working directly with these industries to improve their tax payments, leading to a reduction in payment obligations. The ATO has supported and educated business owners to make informed decisions about their tax obligations, altering key figures that saw the hair and beauty industry as the industry with the third highest number of reports of potential tax evasion.
Weigh in: do you offer cashless transactions? How has this helped your business?