Protect yourself from an ATO Audit
Would your be covered?
There’s nothing more frustrating than being selected for a review or audit of your lodged returns instigated by the Australian Taxation Office (ATO) or other government revenue authorities. The cost of being properly represented can be quite considerable depending on the circumstances. Even a simple enquiry can require hours of work.
Audit Insurance covers you for any professional fees incurred such as using your accountant or a solicitor to complete the audit for you. The cost of these fees can be considerable depending on the amount of time to complete the audit activity.
Audit activity can affect all taxpayers regardless of whether you are an individual, business or have a Self Managed Superannuation Fund. Below are just a few examples of recent focus areas:
Work Related Expenses
Many individuals have fully claimable work related expenses but the ATO has stated recently that individuals have been making excessive claims and this has led to the ATO scrutinising work related expenses much more closely.
Single Touch Payroll (STP) & Superannuation Guarantee (SG)
The ATO now knows every business that is registered for STP that has not met their PAYG and SG payment requirements. That enables greater compliance cross-checking which leads to more audit activity.
BAS Reviews (Pre & Post Assessment)
BAS Reviews attract a lot of audit attention from the ATO and were noted as one of the most highly reviewed audit focus areas in the last financial year. The ATO are trying to stamp out errors in BAS submissions by introducing the online BAS check tool however this only reinforces that it is a key focus area.
Payroll Tax
Payroll Tax continues to be a major focus area. Data sharing with other government authorities is assisting in raising red flags in this area, as well as in other related tax areas such as Land Tax and Stamp Duty.
Black Economy or Cash Economy
Accepting cash as payment is legitimate however the ATO has benchmarks that it uses to determine if a business is not declaring all of their income. Businesses that do not comply may be audited.
Self Managed Superannuation Funds (SMSF)
A SMSF is an excellent nest egg for the future but there are a lot of compliance issues related to the risk, return, and liquidity of the funds’ investments that need to be fully addressed. One minor issue could flag attention from the ATO that will place the SMSF under scrutiny.
Rental Properties
The ATO intends to significantly increase the number of reviews and audits it conducts in relation to rental property claims with respect to capital works, capital assets, or other rental property related expense claims. The ATO also wants all taxpayers to be aware that if you earn income through sharing-economy services like Airbnb that this must be declared in your tax return.