The ATO is linking databases of property sales, car purchases, international plane flights, dividends paid from shares, and sales of shares and investments with the income declared on your Tax Return.
If your Tax Return income doesn't match with your spending or repayment of loans, then the ATO will probably "red flag" you for a tax audit.
These databases have not been linked before like this, so we're expecting to see a huge increase in the number of tax audits over the next 12 months.
Many small business owners pocket some of their cash takings each week and don't declare this in their Tax Returns.
The ATO now has the tools to catch this out.
When your business Tax Return is lodged, the ATO compares your profit and other key indicators as a % of your total sales with other businesses in your industry. If your profit % is lower than average, then the ATO may decide to do a tax audit just to see if you're properly declaring all the income you actually receive, or if the expenses you've claimed are actually allowable as tax deductions.
Also, not declaring cash income from your business could result in you getting a much smaller price for the sale of your business. We'll discuss this in a future article.
We have 2 keys roles as your tax accountants.
While we don't like paying tax just like you don't like paying tax - at the end of the day it simply is a normal part of life and there's nothing we can do about it except for obeying the laws and lodging a true and correct Tax Return.
If you don't declare all income you receive and if you claim as expenses things that aren't properly allowable tax deductions - then if you're audited and lose you will have to pay back tax PLUS pay large penalties to the ATO.
Is this really worth it?
Let's talk frankly. If you've been naughty in the past, talk to us about it. There are options we can advise you on to help you and reduce possible fines and penalties.
It's better for us to help you declare past sins before the ATO finds out and starts their attack on you.
We'll help you fight the ATO if the occasion is needed. But you need to do the right thing - even if you disagree with the tax laws.
Please - don't doubt our resolve to help you.
We're on your side. And sometimes your good friends need to warn you of things you mightn't see yourself.
As your trusted accountants, we're always looking for ways to make you financially better off while protecting your assets.
With the Australian Taxation Office (ATO) starting to crack down on many aspects of tax compliance, the potential for being audited, investigated or reviewed is higher than it's ever been in the past.
These audits can place a real financial burden on you, your family and business with an unknown amount of additional fees required to defend your position.
An investigative audit could related to your income, various taxes such as land, payroll, business activity, GST and fringe benefits, or employee related compliance like super and workers comp, even record keeping.
The good news is, you can protect yourself with our Tax Audit Service!
Here are 3 reasons why having audit protection is a good idea:
Getting protection is easy! We can send you an information pack which outlines how you can simply and easily take part in our Tax Audit Service.
If you have any questions about our Tax Audit Service, please feel free to contact Nicole today on 03 5911 7000 or reception@smartbusinesssolutions.com.au
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