As a business owner, one of the most important things that you will have to do is to deal with ATO audits. The Australian Taxation Office is incredibly strict when it comes to auditing, and they may select businesses at random for auditing as well. If you get a phone call from the ATO saying that your business has been selected for an audit, there are a number of things that you need to do. A lot of people tend to panic as soon as they get a call about an audit. If you haven’t had a business audit done before, you may begin to think that you have done something wrong and that the Australian Taxation authorities are going to try to figure out what you are hiding.
However, that’s not entirely the case. The ATO has several guidelines and metrics that it uses in order to figure out which business must be audited. If you get a letter or a phone call from the ATO that your business has been selected for the ATO audit process, here are a few tips for how to deal with the entire thing.
The first thing that you can expect is a barrage of questions. You will start getting questions from the ATO about the nature of your business as well as your financial dealings. Now, a lot of people try to answer these questions even when they aren’t sure of the answers themselves. As a business owner, you have some rights, and one of them is to avoid answering questions that you don’t have an answer to. Remember that the ATO will write down everything you say, and if the information turns out to be conflicting later on, they might end up using it against you. Therefore, if you say something wrong in the beginning, it’ll be difficult for you to undo it later on.
Get Things in Order
Once initial contact has been established, you need to start getting things in order. Make sure that all your financial statements are in order and all memos and reports have been aligned. Review your tax papers and your overall tax position and all supporting information that you might need. Then, answer all questions by the ATO as factually as possible without any emotional involvement. A key thing to keep in mind is to make your answers as specific as possible; there is no need to provide extra information if they haven’t asked for it.
What to Share
You are going to get a number of information requests from the Australian Taxation Office. An information overload may arise because of this, so it’s important that you only provide the authorities with relevant details to the questions you have been asked. If you end up providing more information to the authorities, they are just going to take out more pieces and use them against your company. Be very picky and specific with what you share if you want the simplest audit process possible for your company.