Given that record keeping is critical for filing timely and accurate tax

Given that record keeping is critical for filing

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Given that record keeping is critical for filing timely and accurate tax returns, the next section discusses the accounting system adopted by SME operators in this study. 6.3 Accounting systems of SME operators Figure 6.1 shows that more SME operators used a computerised accounting package compared to a manual system or spreadsheet, which is consistent with the Australian findings (Evans et al., 2005). However, a significant number of Maori and Pacific operators were using computerised accounting packages despite admitting to having basic tax knowledge (see Appendices 11 and 12) and a lack of interest in accounting and record keeping (see sections 6.2.3 and 6.2.4). As they were neither familiar with nor proficient in using accounting packages, they experienced more difficulty in gathering tax information. The main reason for adopting the manual-spreadsheet system for thirteen of the 36 SME operators in this research is its simplicity, and it is all they could cope with, as experienced by participant P2 and observed by BE2 and TP4:
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98 Figure 6.1: Types of accounting system used by the ethnic operators “I have set up a spreadsheet to account for everything. In the spreadsheet, I have a breakdown of the expenses and the GST columns and I find accounting for GST is not that difficult if you keep it simple.” (P2) “For them, they are not trained in tax and that it is not a business priority to file tax returns. Most of them have no concept of business bookkeeping at all. For example, if you ask them to record for the day the amount of income and expenses and even a task like that is challenging for them.”(BE2) “For some of them, juggling between having to earn the income and finding time for administration and accounting stuff is a big issue. It depends on their level of computer literacy.” (TP4) The ease with which tax information can be retrieved from their accounting system is dependent on SME operators’ accounting proficiency: “The problem is when they do acquire the computer package they don’t understand how it works.” (TP8) “For some who have just started the business, they bought this MYOB package but they do not know how to use it. Some may put stuff in the package wrongly, and then they get into a real mess and they don’t understand how to fix it.” (BE3 and BE4) “Actually MYOB has caused a lot of work for the accountants. MYOB advertise the product but they do not tell the people that they need a lot of training to operate it as it can cause huge problems. I have come across companies with MYOB that does not reconcile their bank account for the last 18 months. They have un-deposited funds, they have bank account that were $1 million overdrawn. Some of the
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99 accounts tie up and some of them don’t and I have to start again which increases the fees for the clients.” (TP3) Closely associated with using the accounting system is the record keeping function. The next section discusses the person responsible for record keeping, as it affects their tax compliance costs.
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  • Fall '16
  • tax compliance, SME Operators

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