Increased ATO Audit Activity
With two major income tax lodgement deadlines looming, it is timely to raise awareness of a noticeable increase in audit activity from the Australian Taxation Office (ATO) and to consider tax audit insurance cover.
It is no secret that, in recent years, the ATO has implemented a range of sophisticated data matching technology, making it better equipped than ever to review your financial transactions and expense claims. The ATO, together with state revenue authorities, receives information from various institutions and organisations including employers, banks, share registries, other government agencies and, more recently, across its global information sharing networks. The past few months have seen a significant increase in both audit and pre-assessment review activity and this trend is likely to continue well into the future.
We are seeing a larger than usual number of pre-assessment reviews, which require full substantiation to be supplied for all deductions claimed where a taxpayer has claimed work related expenses in their tax return. The ATO is requesting these reviews before they will finalise the income tax return assessment notice.
The other area of noticeably increased activity is with Comprehensive Risk Reviews. Under these reviews, the ATO will generally write to taxpayers with sophisticated group structures and request a full review of their tax affairs for the past four tax years before determining whether or not there are compliance issues requiring greater investigation and response. A comprehensive risk review has a broad scope, involving ongoing dialogue and information gathering to assess and determine identified tax risks.
If you haven't already, you might consider taking out tax audit insurance which will provide cover, up to a limit, for Oxygen Private Clients' fees associated in response to any ATO review activity. If you would like more information on tax audit insurance, please contact your Oxygen Private Clients advisor. As with any of our referrals to an external service provider, Oxygen Private Clients proudly and fiercely maintains its independence and does not accept commission or in-kind benefits of any kind.
To discuss tax audit insurance for your group or for further information regarding ATO tax audit activity contact Alanta Butera, Oxygen Private Clients, 03 9977 2600.
DISCLAIMER: The information contained in or referred to in this Blog Post is general in nature, subject to change, and should not be taken as advice for your individual or your group's circumstances. It is for information only and does not take into account any person or group's specific circumstances, objectives, financial situation or requirements. It does not constitute taxation, legal or financial advice. Oxygen Private Clients recommends you seek specific professional advice before making any decision or taking any action.