What Should the Small Business Owners Know About A Tax Audit Survival?by Stuart Iles Partners Tax Consulting
Heading to tax time, the tax audit is likely to be an extremely nerve-wracking prospect for both the business owner and the business itself. Tax audit is indeed a stressful as well as time-consuming process. As the Australian Taxation Office or ATO is directly responsible to the Australian Government and the community for the purpose of revenue collection and making sure everyone is paying the right tax amount. The ATO requests a tax audit of the tax affairs when they believe a greater in-depth tax examination issue.
The factors triggering the ATO audit are:
• Not paying superannuation to the employees
• Undeclared any other source of income including cash
• Businesses showing consistent losses
• A poor lodgement along with a payment history with ATO
• Taking help of the tax agents having the audit failures history
• Unexplained lifestyle and wealth
The Four Steps For Audit-Proofing Your Businesses in Hobart
i. By Keeping Up-to-Date Accurate Records
Small business owners face a common problem that is poor record keeping. Now, it is a good idea to use simple bookkeeping software to keep the records exact and updated. With the help of accountants and bookkeepers, set up an updated program with the tax regulations for ensuring your compliance. You need to regularly enter the information. So speak to the accountants often so you are not held responsible for the omissions and mistakes. Thus being up-to-date is crucial.
ii. Double Checking Before Signing the Tax Returns Always
Check the figures more than once to make sure the discrepancies are absolutely nil before they are sent off. Look at them to determine they are indeed making sense to everyone, especially to the businessmen.
iii. Save the Document for Minimum 5 Years
The majority of audits take place on the tax returns of the previous year. The auditor might go back to the tax returns of when they believe you have at large understated your taxable income. In that case, the documentations saved from the last five years can save you. With them, you can back up the claims that you have made. Using a scanner, you can even keep every detail scanned. The experienced tax agents from the registered taxation accounting firm in Hobart are the ones you must hire to help you during, before, and after-tax audit procedures regarding tax returns for your Hobart based business.
iv. Correct the Errors Straight Away on First Notice
Just as you realize you have noticed a mistake, then quickly talk about it with your accountants. State the errors done to correct them with their help. The ATO will even reduce the penalties you are likely to incur when you state at the beginning of the audit that there had been errors and with the help of the professional accountants, you have corrected them.
What should you do when you are audited?
After receiving the words that you will be audited, then follow the mentioned hints to fare the process well.
1. If you are to be audited, then ATO will send you a letter outlining the audit’s scope. Do not take any step until you speak to your Accountants and Tax Agents.
2. The Accountants and Tax Agents will clearly explain the terms ATO is asking for and the areas they are willing to look at.
3. Make sure to specify one person who should be the contact point with the ATO, and the person could be either your Accountant or Tax Agent.
4. At every meeting, take down detailed notes. If an ATO recording is made, then surely obtain a copy.
5. Watch out for whatever you are saying. While dealing with the auditors, be extremely respectful and courteous.
ATO's computer systems can easily reveal unusual transactions and irregularities. All that ATO is trying to convey is you shall be caught if you do not pay the right tax amount.
ATO has been invested with unlimited powers if they are calling you for a tax audit. In such instances, you need to be calm and treat them with the utmost respect. But your business could have a significant tax debt or else be insolvent if you have been threatened with an ATO audit and is concerned. Immediately take help from the Tax Agents, if you have been audited, and you are having a debt that you cannot pay.
Created on Jan 3rd 2021 23:20. Viewed 837 times.
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