With 30 June fast approaching its time to be getting your tax affairs in order. If not, the ATO may take a closer look at what your business is up to.
In the case of minor queries, the Australian Taxation Office (ATO) may contact you or your accountant to request additional information or documents. If dissatisfied with the response they may escalate to a full tax audit and the costs of complying start stacking up.
The Australian Taxation Office(ATO) conduct audits when they consider a more in-depth examination of your business dealings is required. This can range from a simple examination of documents to a full investigation into your business transactions and business processes. Don’t despair, there is a small upside to an investigation, the ATO doesn’t “beat around the bush”, they are very open and transparent about their concerns. However, there can also be huge downside as their enquiries may require your staff or your accountant to devote a massive amount of time to satisfy their queries. If your business is preparing its own tax returns, the downtime required to assist the ATO with its Tax Audit will be very costly. On the other hand, where a business utilises the services of an accountant, the accountant’s fees become an immediate business expense, but you will need to pay out many thousands of dollars.
Is there any good news surrounding tax audits?
Yes, insurance companies offer Tax Audit Insurance. There are varying degrees of cover and for a small outlay it can save a business from an unwelcome and unexpected massive bill that has not been included in the budget! By transferring the risk of unexpected tax audit costs to an insurance policy this will ensure you receive your eight hours snooze time.