Staying Prepared for an ATO Audit
There is a fine line between claiming legal tax deductions and engaging in tax evasion. Extreme care needs to be taken when completing your company tax return to ensure that what you’re doing is compliant with the regulations set by the ATO.
Remember that you can be audited by the ATO at any time. And although you may have absolutely no intention of breaking the law, you may be doing it without realising.
How are businesses selected for audit?
To select businesses to audit, the ATO relies on a tax evasion phone line, industry comparisons, data matching technology and random business visits by undercover Tax Agents. The moral of the story here is that you need to always be prepared for an audit at any time.
Set up your record systems
It is crucial to ensure that your records are backed up in case of computer failure. The good news is that we can help you ensure that your records are managed effectively and your processes are compliant with regulations. We can save you the panic of a random audit with effective management of business accounts and records.
The best thing you can do for the health of your business is to consistently communicate with your tax professional about your systems and processes.
Good results come from good communication.
At ATB accountants, our team are dedicated to helping you at every opportunity, quickly and efficiently.
Separate your taxes
Ensure that you monitor your profitability throughout the year so that you’re not met with a nasty, unexpected tax obligation at the end of the year.
The most adept business owners will open a separate account for their tax obligations and will transfer money into it on a weekly basis.
Know your expenses
Knowing the difference between your operating expenses, capital expenses and private expenses is critical in claiming tax deductions on expenses the right way.
Operating expenses can be claimed in the year they are incurred, whereas capital expenses must be claimed over time and account for depreciation. If you’re unsure which category your expenses fall under, our team of professional tax agents can help you.
What happens if I get audited?
If you are selected for an audit by the ATO, it is vital for your peace of mind that you know what to expect. You will be interviewed by someone from the ATO, perhaps on more than one occasion.
And you will need to provide the tax officers with full and free access to buildings, premises, records and documents. It is crucial to ensure that you records are backed up in case of computer failure.
How long does the audit last?
The audit could last anywhere from six months to a year and can significantly impact your ability to conduct your business. Ensuring your records system functions effectively will result in a much shorter audit time.
The tax officers may also contact your suppliers, customers and banks to verify the data you’ve reported on your tax return. If the data you’ve given the ATO is as accurate as possible, you will not have anything to worry about.
What do I do if I’ve been advised I’m getting audited?
Don’t panic! If you’re already a client, we’ll already have the systems in place to make this process as simple as possible.
And if you’re not a client, we can work with you to get the information you need. In the event that you are audited, ATB Partners will work directly with the ATO managing the conversation for you.
Audit Insurance Cover
We offer our clients audit insurance cover which covers any professional costs you may incur in the event of an audit. This insurance is tax deductible and relatively inexpensive.
Tax Accounting Specialists
Tax regulations are complex and intricate in nature, so tackling the task on your own can be overwhelming at the best of times. Do not hesitate to get in contact with us if you are selected for an audit by the ATO.