What is the ATO auditing in 2020?
The ATO is investing significant resources into auditing claims for JobKeeper, the cash flow boost and the early access to superannuation program. With extensive access to data matching tools, the ATO is able to identify at risk cases around these COVID stimulus measures and making contact with thousands of businesses. These initial contact letters might be simply dealt with by providing clarification or they may lead to a formal audit for some businesses and individuals.
Who should you talk to?
The best place to start is your accountant, they are your first line of defence against an audit. They will be able to assess the complexity of the case and should be able to start identifying the areas of concern. Depending on the complexity of the audit, a lawyer may also be required, this should be a specialist tax lawyer not the commercial lawyer you use for other transactions. Lawyers tend to get involved in larger or more complex cases. The earlier you can bring in the lawyer, the more value they can add to the audit. In some cases, you may even need a barrister, but this is generally where you are heading off to court or if you are trying to add more weight behind an argument to the Tax Office.
How long will an ATO audit take?
This question comes up at the start of every audit and there is no definite answer. Specific audits tend to finish up quickly assuming you are providing the information required on a timely basis. They are often resolved within months of the audit being commenced. For general audits the answer is more ‘how long is a piece of string?’, as factors like the complexity of your structures come into play.
How much will it cost to defend?
This goes hand in hand with ‘how long will it take?’. Specific audits tend to be cheaper to run as you usually only need an accountant to assist. With general audits the costs can start to rise. If the accountant can run the audit directly the costs will be moderate. If additional parties are required (lawyers, barristers, valuers etc) the costs can start to escalate quickly. You will need to start to make some decisions in terms of if the case is worth defending and how much time and money you’re willing to spend defending your position.
Should I talk to the ATO?
Unless instructed to by your accountant, we advise that you don’t. Part of your accountant’s job is to liaise with the ATO on your behalf. Your accountant is working for you and has your best interests in mind. They can help negotiate with the ATO to ensure you’re left in the best financial position at the end of the process.
Do you have audit insurance? A lot of businesses will have audit insurance and not even realise they do as it may be part of a larger business policy. Some accountants also offer specific policies around audit insurance. These policies can go a long way to covering the costs of running an audit defence, however you need to understand what is included and what is not included early on in the audit and not assume that all costs are covered. For instance, some policies limit who can provide the services.
DON’T PANIC! Be assured that most audits go smoothly and are resolved quickly. Talk to your accountant, ensure all your record keeping is up to date and if you have any questions just ask. You can contact us on (07) 3023 4800 or at email@example.com.
You can find out more about working with Marsh & Partners here. As your Absolute.Account.Ability partner we’re on a mission to make your business life better. We’ll help you set goals for your business, devise an Action Plan to make them happen and meet with you regularly to ensure you stay on track.
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