Minimise the Risk of an Ato Audit

The first thing to do when you receive correspondence informing you of an ATO audit is not to panic. It's more common than you may think for the Australian Taxation Office to double-check the information you are providing to ensure all of your finances are in order. In many cases, this process doesn't mean that ATO has found anything improper – they may just wish to clarify specific details or ensure your figures line up.

When you have an audit coming up, you'll want to make sure you're doing your due diligence to have all of your finances and information lined up and ready to go. Either preparing your details yourself or with the support of your accountant can put you in a good position for a quick, easy audit. The exact nature of an audit can vary from a quick check of your source documents to an in-depth deep dive into your transactions and deductions.

If you've received a letter for audit from the Australian Taxation Office, you may be wondering the reason behind the request. In most cases, receiving an audit letter is a result of the ATO's data-matching technology finding discrepancies between the information provided on your tax return and other information that is available to them. This doesn't necessarily mean there is a problem with your reporting, and in many cases, a quick resolution can be reached following your audit.

It is a requirement for you to respond to your ATO letter promptly and ensure you provide truthful accurate information. If you aren't finding any problems or discrepancies with your finances on checking, you can report this back to the ATO. If you have done something incorrectly, whether due to user error or misunderstanding, this may be the cause of your ATO letter, and it's crucial to resolve any issues as quickly as possible.

If you have received an audit letter and you'd like to reach out for ATO audit advice, the first people you may wish to talk to are the Australian Taxation Office itself. The ATO can be a helpful resource if you have specific questions about your audit, want to discuss the reasons behind your audit, or rearrange an appointment for your audit in the future.

If you want to seek advice from a professional ahead of your audit to ensure all of your finances are in order, the best person to talk to is your accountant. If you do not currently have an accountant, hiring a specialised accountant with experience in ATO audits can give you the advantage needed to understand your audit and prepare accordingly. Our team at Pherrus has extensive experience supporting our clients through ATO audits.

The ATO audit process can vary depending on what an auditor needs to check and the level of clarification they need about your financial details. All ATO audits start with a phone call, where a qualified professional will go over the basics of the audit and arrange a time and date for a visit on-site to your premises.

On the day of the audit, a qualified auditor will arrive on-site to review your finances and examine any potential issues. You will need to be available to answer questions and clarify information throughout the process, allowing for a smoother and quicker auditing process. In some cases, very little detail or information is required, while in others, a deep dive into financial data may be necessary. Once an audit is finalised, you'll receive a letter providing information on the outcome and details of any interest charges or penalties that apply.

Want to avoid a tax audit altogether? The best thing you can do is keep your finances and all of your information in excellent shape, up to date and in line with necessary Australian Taxation Office requirements. While this doesn't necessarily mean you will never receive an audit, whether, through mistake or error, you are far less likely to need to go through the process if you keep everything ordered and managed.

If you haven't already, one of the best ways to improve your finances is to hire an external professional to support your financial administration and filing practices. A trained tax accountant can provide the guidance and expertise you need to meet necessary standards and responsibilities. The better shape your finances are in, the less likely you'll ever receive that dreaded letter in the post.