It's Tax Audit Time. Should You Be Worried?
If you pay attention to the news, you will have heard that the Australian Tax Office is about to double down on its efforts to raise more money through tax collection. Periodically, the government comes to realise that there is a shortfall in the budget, and, of course, taxation is one of the primary methods to set things straight. Often, tax audits are ordered for businesses in certain high-risk areas in an attempt to recover underpaid or unpaid money. Should you be worried about the situation in your particular business?
Potentially Risky Areas
Many Australians these days are choosing to spread their wings and engage in business practices overseas. However, this is still seen as unusual by the ATO and is often an area where they focus their attention. They worry that certain people may try to avoid the payment of taxes by moving funds to an overseas entity. You need to be sure that you have structured your business properly to avoid any issues.
Property investment is also an area that keeps tax collectors up at night. As a consequence, they look carefully at data gathered from a variety of government departments and other institutions, such as share registries and banks. They want to match this data, so that they can be sure it's all above board.
One industry that is often under the spotlight is construction. If your small business is involved in this area, then it's possible you may get a knock on the door. Often, tax inspectors are trying to determine whether companies are accounting for travel-related expenses properly.
Taking Care
Even though certain activities and industries may be more prone to investigation, that doesn't mean that every business is at risk. You can reduce your exposure by ensuring that you always comply with reporting deadlines and adhere to best practices. For example, file your business activity statement before it is due and make sure that the paperwork is correct before sending it in. An error here or there won't be the end of the world, but it may cause your account to be set to one side if the ATO has to do this all the time.
Standing Out
Try to ensure that your tax footprint is not unusual in your industry, or that you are claiming higher amounts than the average in your field. Ask your accountant to do some research, to determine where the goalposts are.
Making Sure
The best way to avoid making errors and sending in incomplete reports is to get a professional accountant to help you. At the very least, have an expert audit the records and reports that you create yourself. This will pay off in the long run
