The Australian tax system has been carefully designed to be fair to everyone, so it’s important that we all pay the correct amount of tax every year. To make sure things stay on track, the ATO contacts around 2 million tax payers each year to review their tax returns, although not all of these people will be subjected to a full detailed audit.
There are a number of things that may attract the ATO for an audit, such as large dealings in cash, or experiencing large fluctuations in income. However, anyone can be contacted by the ATO, so it is important that you maintain records and keep receipts and documentation. Having these documents organised and stored, can save a huge amount of time and stress
and potentially stop a full ATO audit.
From our experience when dealing with the ATO there a number of things that can help with an ATO audit and even prevent an audit.
Stay on Time
Keeping on time and lodging your tax return on time, means you are less likely to make a
mistake, and stops any rush or backtracking.
Declaring deductions for many is one of the most involved part of preparing their tax return. Claiming deductions varies depending on your occupation and industry, so make sure you only claim legitimate deductions, and you need to have receipts for.
Keeping good records reduces the cost of managing your tax affairs, it also allows more time
to ensure you claim your entitlements.
You need to keep records for five years (in most cases) from the date you lodge your tax return.
Examples of records you need to keep include:
Income statements or payment summaries, from your employer and services Australia
Statements from your bank and other financial institution showing the interest you earn during the income year
Summaries from managed investment funds
Receipts or invoices for equipment or asset purchases and sales
Receipts or invoices for expense claims and repairs
Tenant and rental records