Morning Briefing: Tax office targeting SMEs and individuals with random audits

Brokers could find themselves undergoing a random audit as the ATO cracks down on tax evasion in small businesses... December interest rate hike a "live possibility"...

Tax office targeting SMEs and individuals with random audits
Brokers could find themselves partaking in a random audit as the ATO cracks down on tax evasion in small businesses. 

The Australian Taxation Office will start random audits across small to medium businesses and individuals in 2016 to put a figure on the amount of revenue lost to tax evasion, the Sydney Morning Herald reports. 

The Tax Office has confirmed high-wealth individuals or companies will be excluded from the audits.

The ATO has estimated that approximately $3 billion in revenue may be missing because of tax evasion and misreporting but with the inclusion of the income tax gap, this figure could skyrocket into the tens of billions or more.

"Only in instances where we identify strong reasons to believe the taxpayer has not complied with their tax obligations, would the taxpayer then be escalated to audit," an ATO spokesman said.

CPA Australia chief executive Alex Malley told Fairfax Media he was not supportive of random audits. "One of the concerns with random audits is that their purpose may be more about the integrity of a process than revenue collection," he said.

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December interest rate hike a "live possibility" 
WASHINGTON (AP) — Federal Reserve Chair Janet Yellen said Wednesday that an interest rate hike in December would be a "live possibility" if the economy stays on track.

Yellen described the U.S. economy as "performing well" right now, with solid growth in domestic spending. At their meeting last week, policymakers believed that the threat of global headwinds had ebbed, Yellen said.

At its Dec. 15-16 meeting, the Fed will consider raising a key interest rate from a record low near zero if the economy continues to grow at a strong enough pace to keep adding jobs and push annual inflation toward the Fed's 2 percent target, Yellen said.

Yellen stressed that no decision has been made yet and a move in December will depend on how the economy fares between now and then. She reiterated that when the Fed does start raising rates, it will do so on a "very gradual path."

Yellen's comments came as part of her testimony on banking supervision and regulation.

In her opening remarks, Yellen said that the country's largest financial institutions are still falling short of managing the types of risks that led to the 2008 financial crisis. While Yellen acknowledged progress in making the financial system more resilient to shocks, she expressed concerns about the "substantial compliance and risk-management issues" at the institutions.

"Compliance breakdowns in recent years have undermined confidence in the (banks') risk management and controls and could have implications for financial stability, given the firms' size, complexity and interconnectedness," Yellen said.

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