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Audit Services an Essential Resource and Support During a Tax Audit by tax cooloola
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Audit Services an Essential Resource and Support During a Tax Audit |
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Business
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At some time during the course of their working life, most taxpayers will have their tax information audited by the Australian Taxation Office. For PAYG taxpayers it is often in the form of a desk audit. This means that an officer of the ATO checks the information the taxpayer provides on a tax return against the information about that taxpayer already in their possession. Most of the time, any discrepancies are simple errors of omission or calculation which are easily remedied by the issue of an amended tax assessment. The taxpayer will be required to either pay additional tax or receive a refund, depending on the circumstances. For a business or company, the audit process itself is similar in that it is a matching of information given to the ATO via tax returns against the information the ATO has from other sources. The accounts and transactions of a business or company are much more complex than a PAYG taxpayer, so the audit process is also more complex and for large corporations, can involve thousands of records and transactions. What Triggers an Audit? Audits are generally triggered by some inconsistency when ATO and taxpayer information is compared. A typical scenario that will draw the attention of the ATO are discrepancies between dividend and interest payments declared in the tax return and the information provided by the financial institution making these payments to the taxpayer. People who make unusually large claims for work-related expenses or rental properties, or whose declared income is well below the average for their industry or occupation also put themselves in the firing line. For a business or company, common triggers are what seem to be excessive claims for depreciation or repairs and maintenance, understating Fringe Benefit Tax liabilities, reporting a level of sales that seems unusually low and using business capital for non-business purposes. Of course, there are many more. The audits themselves can target a particular area such as record keeping, wage and salary payments, GST audits, FBT audits, superannuation and contractor payments. Three Possible Outcomes Regardless of the complexity of the audit and the information uncovered, there are only three possible outcomes. The first is that the original return is found to be correct and there is no further action taken. The second is that the ATO identifies an issue, discusses it with the taxpayer who agrees with their position, and an amended assessment is issued. This may involve the payment of additional tax, which could involve penalties, depending on the situation. The third is that the issue identified by the ATO is disputed by the taxpayer who may then lodge an appeal against the amended assessment. In any of these scenarios, the taxpayer is permitted to have someone assist them, and a Brisbane accountant who provides audit services is a valuable resource to have in any discussions with the ATO. Accountants are required to keep up to date with taxation laws and processes, and should be the first point of contact for any taxpayer or business owner who has been advised that an audit is imminent. Click here for more information.
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