Austerity seems to be the buzzword these days. The politicians like to tell the Australian people that they should agree with any measures to cut back on unnecessary spending or to make their tax dollars go further. It's little surprise, therefore, that the Australian tax office seems to be always complaining about the amount of money collected in order to meet fiscal targets. It's no wonder that tax audits are becoming far more prevalent, as underpaid or unpaid taxes are sought. As a small business owner, do you need to worry about an audit?
Overseas Elements
The ATO tends to look for unusual activities and target higher risk businesses when seeking additional funds. If you fit into one of these categories, you may stand an elevated chance of being picked out. Do you have an overseas element to your business operation? The ATO wants to ensure that such a structure is not merely a way to move funds out of the country to avoid paying Australian taxes.
Property
Property investment is another area for additional scrutiny, sometimes. Such investments can be used as tax havens quite legitimately, but bear in mind that the tax office talks with other departments around the government to evaluate how your tax strategy is created.
Greater Risk
Sometimes, the tax office goes on a purge in particular industries, especially if such industries have provided them with a good "result" before. Recently, they've been concentrating on small businesses within the building and construction industries and checking to see if travel expenditure has been correctly reported.
Best Practices
One way to avoid issues if you are at an elevated risk of audit is to always be compliant when it comes to reporting. For example, send in your business activity statement on time and make sure that it's correctly filled out. It is, of course, sometimes possible to make a mistake, and if you do get a notice that you have, it's not something to panic about. Just make sure that you don't make a lot of mistakes too regularly, as this may raise a red flag.
Fitting in
You should try and fit in as much as possible when operating your business in relation to others in your niche. If something is unusual, it could be pulled up by the tax office algorithms. If you're claiming extraordinarily large refunds as part of your GST set up, this may get a second look.
Support
When you employ the services of a professional accountant, you will stand a much greater chance of keeping accurate records and sending in your reports on time. Whether you do this yourself or not, it's always best if you have an independent audit by an accountant as well.
Share14 June 2017
Welcome to my blog! My name is Jules, and I have been running my own business since before I left school. Through the years as my business grew, so too did my tax burden. However, I recently discovered that for many years, I wasn't taking the right deductions and as a result was paying too much tax. I educated myself on the tax law, and I meet with several accountants who helped me navigate the expansion of my business. I hope that all small business owners and independent entrepreneurs can have a positive experience filing taxes, and because of that, I created this blog. I hope these facts, ideas and posts help you and your business to prosper.