Whilst it can certainly be agreed that ATO Audits are a necessary function in ensuring a fair and equitable playing field for all Taxpayers, it can also be agreed that they aren't the most pleasant experience.
We have come across an article on www.dynamicbusiness.com.au outlining some of the factors to be aware of which may contribute to the likelihood of being selected for an audit. Should this be the case it will likely become a timely and costly exercise and therefore it is best to ensure we avoid unnecessary attention.
In a recent M&A article, we discussed the fact that the ATO have more information at their fingertips now than ever. This allows them to gather a greater knowledge of our businesses and financial affairs before our lodgements have even taken place. Below are some very accurate and relevant points to be aware of with respect to triggering an audit:
1. Financial performance that is out of kilter with your industry
2. Not paying the right amount of superannuation to your employees
3. Variances between tax returns and business activity statements
4. Having a poor record of lodging returns on time
5. Consistently showing operating losses
6. Owning motor vehicles, but not lodging an FBT return
7. Getting the disclosure items wrong in your tax return
8. Big fluctuations between years
9. Having international transactions
10. Being in the news
Whilst there are many factors that come into play when the Tax Office are selecting Taxpayers for audit, the above are definitely some of the most common areas of interest for the Tax Office.
Click here to read the full article, or contact your Client Manager and we will be happy to discuss these factors with respect to your specific circumstances.