The Australian Taxation Office (ATO) and other government agencies have continued to report major advances in sophisticated, electronic data-matching procedures in recent years, resulting in a rise in the ATO's Audit Insurance efforts. With the launch of Single Touch Payroll and SuperStream, the ATO now has instant access to more data than ever before.
This year, the ATO will expand its assessment activities to include firms using the JobKeeper payment scheme, to ensure that they are eligible. The likelihood of you, your business, or your self-managed superannuation fund being randomly or specifically selected for an audit, investigation, or review increases as data matching and reporting activity increases.
The Australian Taxation Office (ATO) has a number of mechanisms in place to match the information you supply on your tax return with information from other sources. The Australian Taxation Office (ATO) compares information in tax returns to over 650 million transactions given by third parties.
The ATO uses a variety of external sources for data matching, including banks and financial institutions, health funds, superannuation funds, Centrelink, Workcover, online selling platforms, property records and motor vehicle purchase data, and cryptocurrency service providers. Individual review and audit operations have increased as a result of greater use of advanced analytics and automation, resulting in over 500,000 modifications from audits and reviews during the 2018-2019 tax year.
A Variety of Reasons Can Raise The Likelihood of An Audit, or Possibly Cause One:
- Outside industry benchmarks are being met.
- Employees who are dissatisfied with their superannuation payments - what begins as a review of superannuation can quickly expand into a comprehensive audit of income tax, GST, and fringe benefits tax (FBT).
- Large differences in information lodged with the ATO, such as differences between information reported on an income tax return and information recorded on your company activity statements, FBT return, PAYG Summaries, and so on.
- Operating losses have been consistent.
The ATO looks into your affairs and requests supporting evidence in regard to the amounts reported to them in reviews and audits to ensure the information you've supplied is accurate and that you've completed your compliance responsibilities. The ATO can use a review to see if there are any issues that need to be looked into further. When a deeper or more thorough examination is required, the ATO conducts an audit. An audit or review can take anywhere from a few weeks to many months or even years to complete, resulting in considerable costs and disruption for you and your company. By enlisting the help of a professional, such as your accountant, to manage the response process on your behalf, you may limit the amount of time it takes you to respond, as well as the chance of subsequent inquiries.