Points to keep in mind to avoid ATO Tax Audit

Points to keep in mind to avoid ATO tax audit

Tax time, a stressful time of year! Let’s talk about some points to avoid any ATO tax audits and let your return be a smooth process. Sometimes even the smallest ‘mistakes’ in your tax return can attract ATO attention so let’s get straight in with how to avoid the unwanted attention.

Here are 3 tips to help you avoid getting stung with a tax audit.

1. Make sure your information is correct

Although this may sound like an obvious one, it is a very common mistake that people can make that results in an audit. When filing your tax return make sure all your personal details are correct, full name, date of birth etc. These things are somewhat obvious but double-checking is key, simple as that!

2. Make sure your income matches your lifestyle

If you’re income states that you are on minimum wage but you are off booking flights to Europe and Skiing holidays in Japan, the ATO is going to be suspicious. If the income your making doesn’t seem to match up with your outgoings and spending, then alarm bells might be raised and the ATO may actually begin to assess the assets you own. They may calculate the income they believe that you need to support the lifestyle you are living and if things don’t seem to match up you could end up in a sticky situation! So, make sure that your lifestyle and income match up so the alarm bells aren’t set off! In other words, make sure you are declaring all the income you are earning, even if it was only that 1 week of work at McDonald’s you did last year.

3. Keep hold of receipts and only claim what you’re entitled to

Any sort of business-related expenses that you wish to claim through your tax refund must be able to be backed up with a proof of purchase. Anything you wish to claim to make sure you keep receipts to provide proof of purchase. Keeping receipts helps keep you covered if you get questioned by the ATO and also receipts are important to provide to your accountant if they are doing the return for you. Another tip is not to claim things that you’re not entitled to. It might be tempting to claim your monthly Spotify subscription, but if it doesn’t have anything to do with your job then it’s best to leave it out!

Even the smallest errors can raise alarm bells for an audit from the ATO. Make sure you double-check everything before you submit your return. If you are unsure about what you can and can’t claim then it may be useful to have an accountant lodge your return for you. It’s better to be safe than sorry, so double-check and always seek professional advice if you are unsure. Good luck!

Related: What Does Balancing Account Mean When Submitting an ATO Tax Return?

Nilesh Vasoya

Nilesh Vasoya

Nilesh Vasoya is a CPA and experienced business advisor with 15+ years’ experience in accounting and tax, and certifications from NTAA, ICAI (India). He is also a Registered Tax and ASIC Agent. Nilesh specialises in financial reports, cash flow, taxation advice, internal audit, account reconciliation, and advice for small businesses on maximising XERO, MYOB, and QUICKBOOKS. He is experienced in developing strategies for growth within small-medium scale companies.

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