An ATO audit or review can be taxing for any business, specially for small and medium size businesses, mainly due to lack of appropriate level of internal controls and accounting practice. An ATO audit may not only cause a financial hardship but business disruption as well. To manage the audit/review process, you will require the business to either deploy its resources or hire an external advisor, both will have significant cost implications.
Common reasons for ATO audit
Some of the common reasons that triggers ATO audit for private businesses are:
- – Have financial performance that is out of sync compared with your industry;
- – Variance between tax returns and business activity statements;
- – Have poor record of lodging returns on time;
- – Don’t pay the right amount of superannuation to your employees;
- – Consistently show operating losses;
- – Own motor vehicles, but don’t lodge FBT return;
- – Big fluctuations between years;
- – International transactions;
- – Wrong disclosure in your tax return
Make sure you’re prepared for an audit
As a business owner, you don’t want to trigger an ATO audit for your business. Having a tax risk management process involving your business advisors is a good way forward. Have a good accounting system and periodical reconciliation process is in place, ensure that all supporting documents are available (for five years, some records may need to be kept longer).
As an experienced tax accountant and advisor for small and medium size businesses, DSV Partners proactively assists its clients in reducing the risk of a tax audit. We ensure our client records are updated and reconciled on periodic basis; your business performance is compared to industry peers, where available. If a client is selected for an ATO audit, we assist our clients in handling the process.
Should you have any questions or need assistance wait a tax audit or review, get in touch with DSV partners today!
Image Source: Boris Dzhingarov / Flickr
