No business owner looks forward to a letter from the taxman requesting a closer look at the books.
If you’ve received an audit letter – an official request by the ATO to review your accounts and confirm your taxes have been paid to date – don’t panic, BUT, be prepared.
These four steps will help you get through the process with minimal stress and the best possible outcome;
1. Respond promptly
If you lodge on time and pay on time, there’s a good chance the ATO contacted you for a simple spot check.
In this case, all that may be asked is that you provide receipts and answer a few questions. Give the tax office the information they’ve requested promptly so they can close the file quickly, and you can move on.
If an on-site audit is required, you can’t avoid the inevitable. Call to confirm the date and request any information the auditor will need to help you prepare.
Responding promptly and cooperatively every step of the way is the best strategy for getting through an audit. Reacting defensively or unprofessionally can invite more probing questions.
2. Seek professional help
Get in touch with your accountant as soon as an audit has been scheduled for advice and support.
A tax accountant can explain the audit process, knows the ATO system as well as anyone, can help you get your books in order, and offer personalised advice to help you prepare.
If you’ve received an ATO audit request, Contact us to find out how we can help you.
3. Get organised
An ATO auditor may ask you to provide receipts that prove your lodgements. On the day of the audit, be ready with your paperwork and be prepared to answer any questions.
Being organised and prepared shows you’ve done your best to report your taxes accurately. If your papers are in good order, and you don’t raise any red flags, it’s much more likely the auditor will wrap up once the audit’s basic requirements are met.
As a word of caution, only provide the auditor with the information they’ve asked for – no more, no less. Stick to specifics.
4. Pay quickly
In the best possible scenario – your records are in order and you’ve been conscientious about paying your taxes – an audit won’t lead to any unpleasant surprises.
If, however, an auditor finds that you do owe unpaid taxes, unless you have a solid reason to challenge the auditor’s findings, pay what you owe immediately.
You’ll avoid accruing additional penalties, interest, fees and payments. We also often see a “discount” on any penalties for co-operation and prompt payment.
For more information on record keeping visit this helpful page.