ATO Audit: Are You Next?
The Australian Taxation Office‘s data matching programs are triggering some red flags increasingly where the data that was provided originated from an external source.
Even if someone has not attracted the Australian Taxation Office or ATO’s attention before, he or she can already be a subject of their reviews or total audits.
The ATO gets their data from multiple sources. These sources include:
- Department of Immigration and Border Protection
- Share registries (the sales and the dividends)
- eBay and any other similar online stores
- Sharing economy transactions (like Airbnb or Uber)
- Austrac (like foreign money transfers)
Now, the ATO also works together with the insurance providers in order to pinpoint the policy owners of assets like aviation, marine, fine art, motor vehicles and pure-bred horses. They will make use of the information to get to a more exact estimate of these individual taxpayers’ wealth as well as make sure that this matches with the information lodged by the taxpayers with ATO.
Example instances where income was uncovered
The ATO contrasted a bank’s EFTPOS (electronic funds transfer at point of sale) terminal data with the reported income from a tax return.
Result: An income tax review
The Department of Transport and Main Roads informed the ATO about the purchase and the registration of a company’s new luxury vehicle.
Result: A fringe benefits tax audit
The sale of a property was reported by the Office of State Revenue.
Result: A capital gains tax review
What takes place when an individual or a business is flagged?
Sadly when an individual or a business is flagged for an audit or a review, the participation during ATO’s investigation is involuntary. Even when an individual or a business did the right thing, they can still be audited.
Even though there may not be mistakes and extra tax still needs to be paid, there are costs with participating during investigation. It depends on the situation’s complexity, and this ATO audit can cost thousands of dollars with the legal and the accounting fees. This is the reason why accountants from firms secure accountant insurance to cover the costs during audits or investigations. Individuals and businesses should also get the same insurance against tax investigation to help with the costs from these audits.