SOS – the ATO is on my back!

Alicia: Hi, this is Alicia from the Australian Taxation Office calling for Mr John Smith. John Smith: This is he Alicia: I’m calling regarding the Activity Statement you have recently lodged for the June quarter. John Smith: Ummm ….. yes!? Alicia: It has come up for review and I was hoping to ask you a few questions.

John’s heart begins to pounce at 200 km’s per hour. He fears interrogation. What could they possibly ask? What if his answers are incorrect?

Despite the heart pumping harder that usual – following some simple proactive and reactive strategies will keep your heart attack at bay!

(Cont’d) As a proactive and preemptive strategy – keep your original sources documents organised and readily available. Should they ever be questioned by your accountant or the ATO – you will be adequately prepared!

As for reactive strategies:

  • 1/ Stay calm. You are not being accused, receiving a penalty nor going to jail. Step one is to simply confirm the numbers you recently signed off and lodged.
  • 2/ If you have accountant, ask the ATO officer to contact your accountant wih any specific enquiries.
  • 3/ Help your accountant help the ATO efficiently and promptly. If your accountant needs an original receipt – provide the original receipt. If your accountant needs a refresher on a particular aspect – refresh his mind!
  • 4/ Follow up the ATO every 2 weeks. Despite your desktop audit being the top thing on your mind, you are just one of hundreds for the ATO officer assigned. Stay patient but follow up, via your accountant, every two weeks. You don’t want the audit running endlessly.
  • 5/ ATO Decision – if the decision requires your lodgment to be amended – make sure you and your accountant understand such a result. If the amendment will result in a payable amount, and it is an amount you cannot afford as one lump sum – you can apply for a payment arrangement. (Tip: Small Businesses currently get upto 1 year general interest charges free on their Integrated Account (BAS Account).
  • 6/ Stick to your payment arrangement. Aim to pay the ATO 2 or 3 days ahead of the provided ATO timeframe.

In the current post GFC climate, out of the ordinary or excessive refunds have a very high chance of being stopped and followed up by the ATO.