ATO Tax Audits: Your Survival Guide
Has the Australian Taxation Office (ATO) come knocking on your door asking for a please explain?
Do you consider your tax affairs to be at risk of an ATO enacted audit or review?
Below we have compiled some of the ATO’s ‘areas of focus’ which all taxpayers should be aware of: Where is the ATO looking? - Transactions where the tax and economic outcomes are inconsistent - The use of complex tax structures - Inconsistent alignment of tax and business performance What does the ATO wish to see? - Appropriate evidence and documentation kept on record for transactions and tax treatment - Proactive management of tax responsibilities, including use of a qualified tax agent and correct tax being paid in line with business performance What are some of the consequences if everything goes wrong? - Penalties may be enforced for making false or misleading statements - Garnishee notices may be enforced on the taxpayer - Jail terms in significant cases What is the best way to deal with an issue? Be proactive! Anticipate an ATO audit or review and take a course of action that may include - Obtaining a private ruling
- Amending your tax return
- Formulating a reasonably arguable position If the ATO has already contacted you, then your course of action may include - Making a voluntary disclosure
- Amending your tax return In summary.. - Always keep open dialogue with the ATO
- Be prepared to make a voluntary disclosure, and
- Consider obtaining Audit Protection Insurance to cover the payment of professional fees incurred as a result of you being selected for an audit, review or investigation by the ATO. The above information is intended as a guide only to provide a quick overview of some of the general information relating to ATO tax audits.
Please contact Tardrew Partners to obtain advice tailored to your individual circumstances.