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The ATO’s new streamlined tax return system will lead to more ATO audits of private businesses, according to national accounting and advisory firm William Buck.
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Private businesses facing more audits
13 May 2014
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8 minute read
This year the ATO is expected to data match over 640 million transactions to tax returns as part of the Government’s MyTax reforms.
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Greg Travers Tax Director at national accounting and advisory firm William Buck said “With increased ATO scrutiny, private businesses are in danger of triggering an ATO audit, regardless of whether they have done anything wrong.
“While ATO audits are a necessary part of an effective tax system, they can be expensive and disruptive for a business. There are a number of common ways in which a private business may trigger an ATO audit”.
What these triggers show is that tax compliance – in particular annual income tax returns – should be treated as far more than a routine process, according to Mr Travers.
“Private businesses would do well to learn from the larger corporate taxpayers and take a more proactive approach to managing their tax exposures,” he said.
Mr Travers outlined the ten most common ways to trigger an ATO audit;
• Have financial performance that is out of kilter with your industry
• Don’t pay the right amount of superannuation to your employees
• Variances between tax returns and business activity statements
• Have a poor record of lodging returns on time
• Consistently show operating losses
• Own motor vehicles, but don’t lodge an FBT return
• Get the disclosure items wrong in your tax return
• Show big fluctuations between years
• Have international transactions
• Be in the papers
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