So you’ve lodged your tax return on time, and now it’s smooth sailing until the next financial year. Unless, of course, you’re audited.
Sounds scary. The instinct is probably to panic because only 16 per cent of us have ever gone through the auditing process in the past, according to a recent survey by ServiceSeeking.com.au.
But panicking won’t do you any good. Admittedly, it will most likely be a hassle, but you can definitely ease the burden by following these tips.
1. Know the kind of audit to be conducted
Some audits require no more than a phone call or letter asking for more documentation or information. Others, however, necessitate a visit from a tax officer. In any case, it’s important to be organised so you can produce invoices, records and any other evidence that will show you have complied with your obligations. If you fail to give proper documentation or an explanation of how you manage your books, things could be a little difficult.
2. Gather all the information you can
It pays to have good record keeping as this will make it easier for you to collect any information you need to fill in gaps or correct discrepancies that the ATO found during a review. Apart from ensuring your books are in order, you can also seek help from customers, suppliers and banks that you’ve dealt with in the past.
3. Get an accountant to help you draw up a strategy
Accountants can expertly advise you on how to go about your audit. This can go from being honest about errors in order to reduce penalties to disputing any claims that the ATO has made. Hiring an accountant can also make the situation a lot less stressful. You can skip meetings and ask your accountant to go instead, and you can also have the audits held at your accountant’s office. This way, you can still focus on your business as usual.
4. Be cooperative and patient; admit any mistakes on your part
Letting anger or frustration rule over your mind won’t help with your tax case. Be proactive and make sure to provide clear answers to the ATO. If you’re in for a full-blown audit, follow-up interviews are normal so be patient.
5. Consider audit insurance
Of course, an accountant’s service doesn’t come for free. At the end of this hurdle, you’ll need to settle the accounting fees. Audit insurance can offset these expenses and can also give you peace of mind, knowing you have a professional to help you out.
Click here for tips on avoiding the red flags that lead to an audit.