An ATO audit is an assessment of a taxpayer’s financial records, usually undertaken when the Australian Taxation Office (ATO) has identified unusual activity on a tax return.
There are various triggers that can prompt an ATO audit, ranging from proactive compliance initiatives to red flags on submitted documents.
Common triggers include:
An ATO audit can be costly, time consuming and stressful for taxpayers. It is important to work with a qualified accountant or tax agent throughout the process to ensure compliance.
An ATO Audit is an in-depth review carried out by the Australian Taxation Office (ATO).
The ATO may choose to audit any individual or entity and may ask the taxpayer for additional information or documents to support the claims made in the return and ascertain that the correct amount of tax has been paid.
The audit process reviews and confirms the taxpayer’s records are accurate and meets all relevant Australian tax laws. The audit may cover all aspects of the taxpayer's financial transactions, including income, deductions, and other information reported on their tax return.
During an ATO audit, discrepancies between what was reported and what is true can result in additional taxes due as well as incur possible non-compliance penalties, which can be costly.
The process allows the taxpayer to challenge any discrepancies that are identified and potentially reverse any charges or penalties applied. If a discrepancy is found during a tax audit, the ATO may require additional documentation or evidence to support any claims made on the tax return.
A successful completion of an ATO audit may result in a change to the amount of tax a taxpayer's tax position depending on its outcome, either through an adjustment of their current assessment or by issuing them with a new assessment altogether.
Getting audited by the Australian Taxation Office (ATO) can be a worrying experience for any business or taxpayer.
Everyone has an obligation to pay the income tax due and lodge their returns on time.
An ATO audit is the process by which a review is conducted into a business’s tax records to ensure correct payment of income tax.
Industry benchmarks and data matching are two common methods used by the ATO to identify discrepancies in a business’s tax payments. Bank account transaction analysis is another.
It is recommended to voluntarily disclose information right from the start.
Be proactive, if you believe your business is at risk of an tax audit, get in touch with us today to discuss how we can help.
From a tax accountant’s perspective, there are several steps you can take to minimise any negative impacts of ATO initiated tax audit.
It is important to be aware of the ATO record keeping requirements and to ensure that all records are kept up-to-date.
NOTE: If you own a business then it is even more important to keep accurate records as these will be subject to additional scrutiny by the ATO when reviewing deductions and other claims.
By taking these steps, you can help minimise the chances of being audited by the ATO. In the event you are audited, then by adopting these guides, it will help reduce any negative impacts that may result.
Be proactive, dont wait for an audit to happen, Assuris FIG business accountants can review your internal controls. By identifying gaps, and detecting early on, we can create an action plan with achievable objectives to help prepare your tax affairs.