Many people are uncomfortable with the thought that that they could be audited. One of the questions that we come across is ‘what do I do in the case that I am audited?’ While the auditing process is far from enjoyable, there are steps you can take to make it more smooth and less time consuming.
One of the first steps to making for a smoother auditing process is by ensuring that the deductions that you are claiming can be substantiated. For example, if you claim deductions due to a flight that you took for business, it is important that you keep any receipts that are given to you in regards to that flight. By maintaining accurate information on your deductions, you will avoid having to chase up the information at a later date if you are audited. The main way to provide proof of purchase are receipts but entries on a credit card statement can also be useful.
Other items that are often requested by the ATO are copies of payment summaries and copies of all income. In the event that you are audited, it is important that you have copies of these for your records. By having these items on hand, you can easily provide this information to the ATO, which gives them confidence that you are keeping good records.
If you are claiming car deductions on your Income Tax Returns, you want to make sure that you have an accurate log book. This needs to cover at least a 12-week period within the last 5-years of the usage of your car. This is something that the ATO will definitely ask unless your claim is based on cents per km.
If you are a business being audited, besides the normal income and expenditure there is also a possibility that your employee records could be examined. Throughout the year it is important that you are keeping accurate records of employee’s wages that are reconciled to your quarterly BAS. There could also be a scrutiny of your superannuation guarantee payments so, again, good records are invaluable.
When most people get advised that they are being audited, their first step is to find an accountant to assist in the process. By doing this, you can incur quite a hefty bill due to the fact that the auditing process is extensive and time consuming. Proactive Accounting can offer you assistance and a safety net in the event that you are audited. Here are Proactive we offer audit insurance to businesses and individuals should they have concerns. We do highly recommend this service to our clients that are businesses owners or are concerned that they may be audited. By investing in audit insurance you are protecting yourself or your business from a large accounting fee as this is what the policy covers.