No business owner wants an audit letter from the dreaded taxman demanding a closer look at the books.
If you’ve received an audit letter, an official request by the Australian Taxation Office to review your accounts and confirm your taxes have been paid to date, don’t panic. Now is the time to prepare.
With these four steps, you will get through your audit with minimal stress and hopefully a good outcome.
If you file your taxes regularly and pay on time, there’s a good chance the ATO contacted you for a spot check.
If this is the case, all that may be asked is that you provide receipts and answer a few simple questions. Give the ATO the information they’ve requested swiftly so they can close the file quickly, and you can move on.
If an on-site audit is required, you won’t be able to avoid the inevitable. Call to confirm the date and seek any information the auditor will need to make sure you are prepared.
Responding promptly and cooperating every step of the way is the best strategy for getting through an audit. Reacting defensively or unprofessionally may invite some more probing questions.
Seek professional help
Get in touch with Precision immediately for advice and support. And if you’ve been handling the books on your own, now is the time to think about engaging our services.
We will explain the audit process, help you get your books in order, and offer personalised advice to help you prepare.
If a tax lawyer is needed, we can assist with the engagement.
Many tax lawyers will offer a free consultation. They will provide you peace of mind by explaining all of your obligations and rights and ensuring those rights are protected.
An auditor will ask you to provide any receipts that prove you qualify for the deductions you’ve claimed. On the day of the audit, be ready with your paperwork and be prepared to answer any questions they may ask.
Being organised and prepared shows you’ve done your best to report your taxes accurately. If your documents are in good order, and you don’t raise any red flags, it’s much more likely the auditor will finish up once the audit’s basic needs are met.
As a word of caution, only provide an auditor with the information they’ve asked for – no more, no less. By offering more explanation or “proof” in the hope of avoiding further questions may backfire, raising new ones. Stick to specifics.
If your records are in order, this is the best possible scenario, and if you’ve been diligent about paying your taxes – an audit won’t lead to any unsavoury surprises.
If, for some reason, an auditor finds that you do owe unpaid taxes unless you have a valid reason to challenge the auditor’s findings, pay what you owe immediately.
This will avoid accruing additional penalties, interest, fees, and payments. Most importantly, you’ll be able to put the audit behind you so you can get back to focusing on what’s important, your business.
A final word: if you want to fight the taxman before pursuing legal action, weigh the cost and benefit. Legal fees will add up quickly, so be sure the amount requested by the auditor – including interest and penalties – makes it worth what you’ll end up paying in legal fees.
Get in touch with us today, and let us discuss how we can help you through your audit. Join the Conversation…