Hi, I’m Nick
Today we’re talking about what to do in the event of an audit. So audits can be a pretty stressful time, but they don’t necessarily have to be. So today we’re just going to go through some tips of what to do during an audit and we’re also going to talk about what are the common causes of triggering and audit with the ATO. So some of the things that do trigger an audit, CGT events, so selling an asset, receiving quite a high capital gain the ATO will sometimes look into that. They will also look into a high level of deductions. So a lot of you, if you have completed your own tax return, you might see a warning pop up from the ATO saying that for your industry your deductions are quite high spot on for a lot of people, but for some people it will actually trigger an audit from the ATO, but usually you will get those warnings first.
So the other thing will be a substantial change in your tax position. So if you’ve been paying instalments, because you’ve historically been getting a tax bill each year and then suddenly you’re getting a tax refund and you’re getting all your instalments paid back. The ATO might look into that so that’s something to remember as well. The majority of the time for these sort of events, they’re all pretty well explained. The ATO will ask the question we will send them the information and it’s all good. There are a few things you actually need to do for us to be able to get a clear slate with the ATO.
Yeah. So as Nick was just alluding to, you can reduce the severity and basically the stress of an audit. And they’re fairly simple steps that you can take. So obviously one is keeping receipts for deductions, that’s fairly straightforward everyone knows this. It’s also why when we have requested information is because basically, we want to have it on file, just in case the tax office does ask the question. We’ve already got it on file. And we just basically put that off to them rather than having to call you, you having to go through records for the last few years so good records are key. So obviously if you want to, we’re happy to have all digital receipts here in that we use our client portal and that is a good way other document storage system for you. And then that way, if it is ever audited, like, you’re not trying to go back five years to find a receipt.
So that’s a pretty key one, make sure you’ve got the receipt there and you’ve got it in a safe spot usually. And the ATO are happy with scan copies and photos as well. So you don’t need to keep it in a shoebox.
Another key point is communication is key. So communication with us, us communicating with you, and basically everyone communicate with the ATO with the audits that we’ve had in the office. Basically the ones that have gone really well is when basically we openly communicated to the case officer saying, Hey, yeah, we’re onto it. Thanks for your email. We’ll start getting this together. We’ll get it to you in say, two weeks time. And then we make sure we get it to them within basically a week that generally keeps them pretty happy.
So following from that, obviously with information requests, give the ATO what they asked for and just don’t provide it rather than documents, because if you get them to relevant documents, even if you think it’s a trivial receipt or something, it can trigger further audit actions.
So what we like to do is basically we answer the questions that are asked and nothing more helps speed up the process, keeps the ATO focused on what they wanted originally. Along with that obviously with that communication, it needs to be formal. So don’t be fairly blahzay and casual with them. Like it’s still an audit and that, and they are doing it for a reason. So something’s obviously piqued their interest. So as long as you keep your thing, professional, courteous, again, you’re going to keep the ATO on your side and help speed up the process.
Obviously, if you are getting audited to contact us, let us be the conduit for everything helps again, helps speed up the process is only one person providing the info also helps to relieve some of the stress on you because you’re not having to field all the questions. And we can just ask you for the relevant info don’t have it.
Yeah. And then basically with that, where you can basically ensure we only send the relevant documents. And if the review officer asks for something that doesn’t relate to this particular part of the audit without due reason, basically we politely decline to provide that information as well.
Yeah. So that’s pretty much the steps you need to take. Things to remember is that cooperation is key. So the more cooperative you are, the more clear cut the information that you’re giving is, the easier the ATO will go. If they have too, if it looks like your intentionally swamping them with information and trying to muddy the waters, they’re going to react in kind. And they’re going to hit you with their top level audit and they are going to come down hard on you.
So cooperate, be clear with the information provided and don’t stress because stressing out can make life harder for everyone. And that’s what we’re here for. That’s why we ask the annoying questions during the year can you provide this receipt, can you provide this invoice. That’s all for leading up to just in case you get audited. So yeah, hopefully that helps relieve any sort of pressure you’re feeling, any stress about the subject and hopefully it doesn’t happen to you, but if it does, we’re here to help. Thanks for listening.