Tips on how to avoid getting audited
Always be wary of how you report your income, wages and GST/HST Always report your income, wages and GST/HST correctly. Be as accurate as possible. Compile and keep records and make sure they are accurate and up to date. Be aware that you may be audited by the ATO, if you are under the age of 65 or if you have a total of $50,000 in the bank or personal investments. If you feel you are being audited or any questions arise as to whether your income and transactions are correct, be sure to take your accountants advice before you complete the transaction, to ensure that you are only paying GST/HST or income tax. Know your rights. If you are audited, you may be able to receive tax assistance. You may be able to receive a review of your tax situation.
Role of the Australian Tax Office
Any person with an annual income of more than A$180,000 per year is required to file their annual income tax returns (which are also known as ITRs) with the Australian Tax Office (ATO). Every taxpayer has the right to send their returns directly to the ATO without the need for the company that they work for. However, the ATO will ask for those returns. You may want to know what can go wrong. If you are asked for your ITRs for the year prior to 2016, it could be to find out whether you have already filed your returns for the past tax year. Even though the ATO only ask for your returns for the previous year, they may request more documentation. Consider This To avoid getting audited and having to pay a large sum of tax you will need to look into the best ways to file your own returns.
Penalties for an audit
If you're audited by the ATO and end up owing a debt, you may be on the hook for penalties and interest. That's not only costly but can also lead to bankruptcy, which is unfair on people who may be in a financial position to pay the debt. If you are audited by the ATO, the agency will take all your income, all your tax, all your financial information and any other documentation that you might have to investigate your personal finances.
The most important thing is to keep good records. If you don't keep good records, you will not be able to prove whether or not you do have a legitimate source of income. If you are a self-employed person and you suspect that you might have earned income, make sure you keep copies of your tax return for the past two years. Keep a log of all the transactions you made. These are the things the ATO are looking for. Not Reporting Your Income There are many ways to be able to make income. If you don't report it, you will have no proof that you have made a legitimate source of income. If you have made money from gambling, selling your home, a bar, stock or anything else, report it to the ATO.
Australia’s Tax Office has an extremely large amount of power, in that it can do almost anything it likes. The rich and successful don’t like being up to the spot, and I can’t say I blame them. By avoiding being audited at all cost, you stand a very good chance of not being made to pay any more money than you are due.