What to expect from an ATO risk review and audit
HOW DOES IT WORK?
The ATO can audit a business at any time. They obtain information from a number of sources. These can include banks, government agencies, taxation forms and data-matching programs. The information is then compared to their income and expenses. Which the business reports in their tax returns and activity statements. An ATO review will assess your income tax compliance as well as GST and employee obligations such as superannuation.
There are different types of audits for small to medium enterprises. These include record keeping, income tax, data comparison, cash and hidden economy and superannuation guarantee audits.
WHY AM I GETTING AUDITED?
The ATO may conduct a review of your affairs if any unusual data is detected. Also, you can be audited if your figures don’t match industry benchmarks for similar businesses. A full audit may follow depending on their initial findings. Once an audit is set in motion there are several stages in the process. These include an initial meeting, research, and investigation by ATO agents and discussions with business owners before the ATO issues a final audit report and outcomes.
The ATO will often issue an interim report before the final report. Thus, this gives business owners an opportunity to provide further information or to review their position. Audits can be completed within a few months or take up to 18 months.
WHAT TO EXPECT FROM AN AUDIT
- If your business is linked with a registered tax or BAS agent. The ATO will generally work together with them first. The business will be assigned an ATO case officer.
- During the initial interview, the ATO officer will explain why the business was chosen for an audit.
- The ATO should provide an indication of the period that will be audited, and the business owner’s obligations. Also, what to expect from them during the process. There will also be an opportunity for voluntary disclosure.
- Next, an investigation into business records will be conducted.
- Business records are crucial to an ATO audit going smoothly and efficiently. The ATO will require access to all records. This includes bank statements, contracts, agreements, payroll, finance arrangements, asset purchase and disposal, and all accounting records.
- Personal records may also be needed if the ATO suspects significant undeclared cash income.
- Calculations of turnover reduction and employee nomination forms will need to be shown for Jobkeeper and COVID-19 audits.
- This can be a difficult process but always assume the best. The ATO have a flexible and cooperative approach. Always be calm and professional when dealing with your case officer.
WHAT CAN YOU DO?
Contact one of our accountants if you are unsure of what your compliance obligations are. They can assist you in going over your affairs, highlighting any areas of concern, and work with you to implement changes to ensure your compliance risk is limited. This will enable you to proactively manage your records and accounts to reduce the impact on your business.
If the ATO have contacted you directly about a review or audit, talk to us about helping you through the process to reduce the stress of the process.
Our accountants are extremely experienced in these matters and are always here to help. Whether it be confidential advice or full assistance to be audit ready, we’ve helped clients through this process countless times, so don’t hesitate to get in touch with us through this link.
– 10 February 2021 –
General Advice Warning
In preparing this article, Praescius Financial Consultants NSW Pty Ltd, Praescius Financial Consultants NT Pty Ltd, Praescius Financial Consultants HB Pty Ltd and Praescius Financial Brisbane Pty Ltd have not considered your personal circumstances, goals or objectives; as such the information, commentary and assertions made within this article may not be suitable to you. Please seek personal financial advice prior to acting on this information, or making a decision regarding the choice of a financial product or strategy. Further information and disclosures can be found in our Financial Services Guide or by contacting us on the phone numbers provided.
Praescius Financial Consultants NSW Pty Ltd, Praescius Financial Consultants NT Pty Ltd, Praescius Financial Consultants HB Pty Ltd and Praescius Financial Brisbane Pty Ltd are authorised representatives of Praescius Financial Holdings Pty Ltd ABN 14 610 960 980 AFSL 486455, 2a/57-59 Oxford Street, Bulimba Qld 4171.
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