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Employer audits to surge, ATO warns

Regulation

The ATO is clamping down on accounting errors with employment taxes and nudging employers to shift their SG compliance closer to real-time.

By Christine Chen 10 minute read

The ATO has told tax agents and their clients to expect an increase in random and risk-based audits with many businesses still failing to fulfil their obligations and making “common accounting errors”.

The scaled-up response involved broad-based reviews of all employer obligations of a business, including PAYG, superannuation and FBT, the ATO told Accountants Daily in a recent statement.

“Employers and tax agents will see increased audits of all employer obligations including FBT,” the ATO said, planning to conduct random and risk-based reviews of business' employer obligations.

"While we know that most employers try to do the right thing, there are those who don’t comply and the increased compliance focus is to ensure employees receive the entitlements due to them and make sure employers don’t have an unfair advantage over those who meet their obligations,” it said.

The ATO’s compliance activities also identified many common accounting errors and mistakes being made, with employers failing to understand their obligations.

As a result, it warned employers that timely and accurate reporting would become increasingly critical with the introduction of payday super and other policy programs.

“We are improving our use of existing data; such as pre-filling the withholding labels on activity statements to assist employers who are small and medium withholders, and matching STP and super fund reporting to nudge employers to improve their SG compliance closer to real-time,” it said.

“So, it’s more important than ever that all reporting is timely and accurate, and if employers identify errors or discrepancies, they correct them immediately.”

The ATO said its random audits would involve reviews of employers’ PAYG, Super Guarantee and FBT obligations as part of its Random Enquiry Program (REP). Those audited would be selected from across the population from small to large withholders.

“These reviews enable the ATO to identify any non-compliance whether as a result of errors or deliberate behaviours, to better inform our tax gaps and understand what employers get wrong and why, supporting better focused future education and compliance programs,” it said.

The ATO refrained from commenting on how many businesses it would be auditing or how long it would continue the REP.

“The ATO will continue to assess the requirement to undertake random compliance activities based on our focus and other priorities,” it said.

Grant Thornton partner George Bendall told Accountants Daily last week that it had only begun to receive REP requests since the end of last year.

Mr Bendall said the reviews were “all-encompassing” and a “drain on resources”, with the ATO asking businesses to produce financial statements, payroll records, logbooks and bank statements for scrutiny.

The ATO also urged employers to ensure they take steps to understand their obligations and put appropriate payroll governance processes in place.

It recommended that businesses check their governance processes for reporting, ensure thorough record keeping and deadline tracking and that amounts were paid into the right account ahead of payday super starting in 2026.

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Christine Chen

Christine Chen

AUTHOR

Christine Chen is a graduate journalist at Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector.

Previously, Christine has written for City Hub, the South Sydney Herald and Honi Soit. She has also produced online content for LegalVision and completed internships at EY and Deloitte.

Christine has a commerce degree from the University of Western Australia and is studying a Juris Doctor degree at the University of Sydney. 

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