ATO to run filter over coffee shops as crackdown spreads its reach

Concerned that operators are skimming off cash from coffee sales instead of properly reporting their income, the Tax Office has warned the sector it will be watching it closely in the coming year.

In its compliance program released today, the ATO has also added plasterers to its traditional list of targets: the rich, big business and construction contractors.

The ATO will put baristas under the microscope by stepping up a surveillance program in which it compares bulk coffee sales with purchasing records maintained by cafes.

"We're actually working with the industry to better understand what their processes are and their controls of the various franchises and individual cafes have in place," the second commissioner Bruce Quigley said.

For big business, transfer pricing between Australian companies and their overseas associates remains an area of dispute with the ATO.

At the microbusiness end of the scale, the Tax Office is also cracking down on plasterers amid concerns about rorting of the Queensland flood reconstruction effort and a several complaints from the public.

"The nature of the work lends itself to a lot of cash transactions," Mr Quigley said. "We're stressing the need for people to have good records."

Unpaid superannuation is also on the hit list, with new laws on phoenix companies that came into effect on July 1 making it possible for the ATO to go after the personal assets of company directors to recover the money.

"It was too easy for them to have a company set up, walk away from that company with all the debts that are owed, not only to the Tax Office but to others, and start again," Mr Quigley said.

The ATO plans to engage with more of the 2600 people who control assets of more than $30 million and will increase audits this year of the more than 70,000 people with wealth of between $5 million and $30 million.

"A lot of them are into what you would call fairly aggressive [tax] schemes," Mr Quigley said.

He said co-operation with other state and federal agencies, including access to yacht registrations and land transfer records, meant the ATO was able to build a detailed portrait of highly wealthy individuals.

The senior tax counsel for the Tax Institute, Robert Jeremenko, said the ATO appeared keen to continue the work of Project Wickenby, its flagship operation targeting tax evasion using offshore vehicles.

"Maybe its a case of the ATO and their new computer system, which caused them a lot of problems a few years ago, starting to pay off," Mr Jeremenko said.