Author: Jason Titman, Business Strategist Date Posted: 2 February 2015
How well are you sleeping at night?
We might ask this question again at the end of this article.
But first, let's start with some trivia to see if you even need to read this article.
How did you go?
As your tax agent we can help you with:
As a tax payer you are responsible for:
A simple salary and wage earner return is pretty easy but when you are in business and have different legal entities, plus borrowings which are often cross collateralised with one or more banks, complying with all of the tax legislation is a lot of work.
Consolid8 recommends that a taxpayer considers the following questions at least annually:
The reality is that for the past 4 years the ATO has been investing in significant programs, staff changes and computer system upgrades to link together a whole host of information sources.
The ATO serves an important function and without taxes Australia could not prosper. The ATO have some excellent people and some excellent systems and even if you do everything by the Tax Act you can still come up for a tax investigation / audit. Some audits are random, some can be an anonymous tip but most are generated by algorithms within ATO computers based on new 'taxpayer risk profiles' the ATO is building up with the benchmark data they are collecting on individuals and businesses.
Our experience at Consolid8 is that some taxpayer reviews / audits by the ATO can go on for 2 to 3 years and involve a number of face to face meetings with the ATO. These reviews / audits often involve a number of written requests for further information from up to 5 years prior. Some ATO investigations are for a single transaction where they investigate the GST or Capital Gain involved with the sale of a business and other investigations involve your whole group of companies and entities. Rarely do these investigations happen right after the event. Often times you are being audited many years later and you might have even changed accountants.
So how is your memory and how was your record keeping? As a Client of Consolid8 we have extensive file storage of records for each of our Clients and we have a range of checklists to assist with ensuring full and transparent disclosure is made to the ATO. However the cost of a tax review / audit for Clients can run into thousands of dollars. Unfortunately, we have very little control over the time taken by the ATO or the extent of their investigation. As a taxpayer you have little choice but to provide the ATO with the information they require in a 'reasonable' time frame and as we all know, often times there are a number of 'grey' areas of the Tax Act that are open to interpretation, so it is very important that you are guided through the process of responding to the ATO.
Your annual compliance fees simply do not cover the time a tax review / audit takes. Unfortunately, we are talking thousands of dollars. So you either make sure you have the money to pay for help when you get an audit request from the ATO or now you can take out audit insurance. Consolid8 encourages clients to take a commercial mindset when it comes to insurance because at the end of the day, you are in business to make a profit and you will have to take some risks.
Audit Shield is a new type of insurance which is available for taxpayers. This cover applies to official Government audits of:
A claim can be lodged for the professional service fees required to walk you through the review / audit by the ATO or a State Based Authority review / audit.
So how well are you sleeping at night now...?
The choice is yours but we highly recommend all taxpayers give consideration to their tax affairs and how well placed they would be to fund an audit from the ATO.
Please contact Consolid8 on 1300 222 353 if you wish to know more.
Complete the below form to request a free comprehensive audit insurance quote from Consolid8.