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Tax Audit: When is the best time to get ready?

Apr 29, 2020
Tax Audit: When is the best time to get ready?

Transcript:

Ross Forrester: 00:05 Hi everyone. Today we’re going to be talking about what to do with a tax audit. Nobody wants a tax audit. It’s always a little bit disconcerting when they come around. Adam, when should you get ready for a tax audit?

Adam Stannet: 00:19 Yes, Ross. So one of the key issues with an audit is realistically you should be ready for an audit before it comes. Realistically you should not be claiming anything that you don’t have receipts for. So just make sure you’ve got all your log books, motor vehicle, home office all stored away for at least five years and keep copies of receipts. If you don’t want keep on paper, a photo or scan’s perfectly fine for the ATO as well.

Ross Forrester: 00:44 The other thing is if you’re having a tax audit, you often get an opportunity to disclose to the ATO something that may not be correct upfront. If you do a voluntary disclosure before the audit starts, there’s opportunity to get an 80% reduction in the penalties that would otherwise apply if the ATO come across a mistake in advance. When you’re getting the ATO notice for a tax audit, Adam, what else are you looking for?

Adam Stannet: 01:10 Well, realistically you just want to treat them with respect, get back to them within their timeframes. If the timeframes are a little bit too tight, just give them a phone call. Most of the people we’ve dealt with an audit, they’re more than happy to give you an extra week if you’re trying to find some documents, and as long as you’re opening communication, generally they’re going to be pretty happy with you.

Ross Forrester: 01:28 Yep, yep. The final point that I’ve always remembered with a tax audit is the final decision of the tax audit is not the final decision. There’s always capacity to object to the ATO decision or even actually take it further to court, either at a AAT or higher. The closing point is a tax audit, if you prepared in advance and you approach a strategy with making sure that you do voluntary disclosure of the contentious positions, doesn’t have to be very worrying or incredibly time consuming event. It can be something that is managed. Thanks everyone. Bye.

Adam Stannet:02:05 Cheers.



Category: Family Owned BusinessTaxVlog

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