Are you at risk of an ATO audit ?
So you ask, what brings you to the attention of the ATO. We are not the ATO so we will address some of the areas we see recurring and what the ATO have published on line. Small Business – the focus is on:
Hiding income, avoiding obligations by failing to register, keep records or lodge accurately;
Benchmark matching against:
Reported income not matching lifestyle data indicators
Reported income not matching small business benchmarks
Failure to correctly report, lodge, pay PAYGW/Super/FBT
3. Activity statements
GST registered but not actively carrying on business
Not declaring govt grants as income
Incorrect and under reporting of sales
The ATO claims that 7 in 10 businesses when reviewed need corrective action, 50% need to improve bookkeeping and record keeping.
Current audit focus is on industries that have large amounts of cash transactions.
These include:
hair, beauty and related businesses
restaurant, café, takeaway and food retailing
store based retailing.
For further details from the ATO website see what attracts our attention.
Individuals not in business – the primary concern is the incorrect reporting of tax deductions.
Common errors reported by the ATO which will alert the ATO to commence a review/audit : - Work-related expenses - Rental properties For further details see, Click Here. The biggest issue we see in Audits is that substantiation isn't correctly prepared when the tax return is being prepared. For example:
4 week representation period for claiming home office Internet, electricity, and mobile phone usage.
Log books for both, the rate per Kms motor vehicle method & full logbook 12 week method.
Unable to provide receipts when requested.
Claiming compulsory work clothing when the clothing doesn't meet the deduct ability requirements.
Also worth considering, the ATO now has access to:
State Land Registry Offices to view all buys, sells of property from Sept 1985.
Rental bond data from state rental bond authorities to identify properties which are income producing.
Share transaction data to check buys/sells of shares.
Multiple data matching programs are running checking:
contractor payments;
credit cards;
motor vehicle registries;
online selling; ride sourcing (Uber);
accommodation sharing
Also, privately owned and wealthy groups – Company groups with turnover > $2m; Resident individuals together with business associates with net wealth > $5m
To sum up, if you are doing the right thing, seeking the right advice as to what you can and can't do and invest the time into substantiation and good record keeping you should be fine. To have your situation assessed, contact us today to make an appointment.
