KMW Accountants and Advisors

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Audit Protection Insurance.

Every year, the ATO increases the number of industries and individuals it targets for audit.

There are quite a number of audits your business could be subject to and it's important to be prepared should they decide to target you.

Individual/Non-Business Audits

Individual or non-business audits include:
  • Desk audits usually aimed at small business people, employees or taxpayers receiving investment income. The most common audit for employees is to substantiate work-related expenses.
  • Data matching to match information received from financial institutions, Centrelink and other government agencies with that disclosed in tax returns.
  • Tax agent client audits. The ATO selects 30 or more clients from a tax agent and conducts a preliminary audit before issuing their tax assessment. These types of audits usually investigate work-related claims.
Source Deduction Audits

Source Deduction Audits are designed to check compliance of a tax return with all aspects of Pay As You Go (PAYG) Withholding. They cover compliance with all aspects of PAYG Withholding.

Business Audits

During business audits, the ATO investigates all taxpayers involved in a business. The audit usually covers business aspects such as income tax, capital gains, GST and FBT.

Large Business/Complex Audits

ATO audits of larger corporations cover every aspect of their business and may be conducted over several years.

High Wealth Individuals

Recently, the ATO began auditing and cracking down on the business activities and tax liabilities of high net worth individuals.

Benchmarks for Industry

You can now obtain ATO benchmarks for your industry to assess your business' profitability against industry standards.

ATO queries

KMW suggests that if the ATO queries something about your business and it's a simple question, you should give them a straightforward answer, if the facts are known.

Otherwise, for more difficult queries, you should request that they email or mail you the question to give you enough time to research and provide an appropriate answer. We suggest you involve your accountant if the ATO asks a ‘tricky' question.

Should the ATO decide to audit your business or financial affairs, KMW recommends you contact us immediately.