It’s crucial to lodge an accurate tax return to avoid unwanted attention by the Australian Taxation Office (ATO).
Businesses and individuals who do a poor job at record keeping will undoubtedly find themselves in hot water with the ATO.
Here are some common mistakes to avoid unwanted scrutiny, and ensure you’re in line with the ATO’s compliance program.
Poor record keeping
First and foremost, it’s imperative that you keep accurate records. Inaccuracy is one of the most common tax return mistakes and can spark the ATO’s interest.
Good organisation can not only help legally maximise your tax return, but it can help you better understand your businesses financial progress.
The ATO has made it known that it compares the performance of businesses to their industry peers. If your business is inconsistent, or there is a large fluctuation year-on-year, then you might find your company’s records being scrutinised from top to bottom.
You also need to make sure you reconcile the information on your company tax return with your business activity statement. Any sizeable variations will no doubt catch the eye of the ATO.
It’s no secret that the ATO targets businesses who have bought big-ticket items like boats, antiques and luxury cars. So if you’ve splashed the cash, then you can expect the ATO to check your returns to see if you can actually afford the item/s.
Large, one-off or unusual transactions, including transfer or shifting of wealth could put you on the ATO’s radar. Failure to disclose items on a tax return could also spell disaster too. For example, if you receive cash and and fail to declare it then your expenses will look high and the ATO use red flag indicators such as unusually high expenses to target businesses for further inspection.
This is a big red flag and will almost always result in an audit. The ATO are constantly on the lookout for businesses making international transactions, especially within tax havens.
Consistently lodging late returns could trigger an audit as the ATO will view this as poor compliance.
With the right financial advice, your tax return is a breeze. At BDH Leaders, we advise you on how to maximise your tax return and keep you on the right side of the ATO. View more information on our tax services here.
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