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Feature Articles

 From 2012, we now list our articles in our Blog. Read the latest here

02/10/2010

How to Prepare for a Tax Audit

Because of our speciality in supplying accounting and financial staff, Nine2Three is often contacted by clients wanting information about a variety of situations.

One of the questions we have been asked, is to assist clients with staff for the preparation of a Tax Audit by the ATO.
 
When the ATO perform a Tax Audit, they will examine the tax affairs and records of a taxpayer to ensure that reported information is accurate and to confirm the taxpayer's tax liability. They will cross-check data against different sources and may send ATO officers to visit the taxpayer's premises to examine records.
 
The Tax Office will look to see if you have done what you are required to do under the tax laws, including whether you:
  • have declared all the assessable income you receive
  • are entitled to the deductions and tax offsets you have claimed on your tax return.
The enquiries or audits vary in their complexity. Sometimes they only involve a phone call or a letter asking you to provide further information or verification of your claims. In some cases a tax officer may visit you. In some cases you may be asked to bring all your records for examination.
 
The Australian Tax Office gives the following information on how to prepare for a Tax Audit on their website:
 
 
When you receive our notification letter, you should review relevant records, tax returns and activity statements.
If you find any errors, bring them to our attention immediately. If you do this, any penalty that would otherwise have been imposed may be reduced.
 
 
  • At the initial interview the tax officer will:
  • provide you with their Tax Office identification and contact phone number when they first meet you (unless they have already done this), as will any other tax officers present
  • tell you the name and phone number of their manager if you ask (except in very limited circumstances)
  • outline the process they will follow, and
  • give you the opportunity to volunteer information about any possible errors you have found. If you do this, any penalty we would otherwise have imposed may be reduced.
 
 
During our enquiries, we will:
  • guide you through the review or audit process if you need us to
  • try to arrange any interviews or meetings at times and places that are mutually convenient, usually during normal business hours
  • explain the purpose of any interview or visit
  • ask clear and unambiguous questions and provide you with all reasonable assistance and explanations to clarify their meaning
  • allow you to choose someone to act on your behalf or to attend interviews with you

In very limited circumstances, you will not be allowed to have your choice of representative or adviser present – for example, if your representative or adviser was involved in the transaction under review. In this situation, we will give you reasonable time to find another representative.

  • tell you in advance when the tax officer will have a legal adviser present during an interview
  • give you reasonable time to provide records, documents and other information, unless we have reason to think that they may be destroyed or altered
  • answer any reasonable and relevant questions
  • allow you to tape record or take notes of any conversations or interviews. You will need to provide us with a copy of any audio tape
  • tape record interviews if you ask us beforehand, or where we consider it reasonable and you agree to it. We will provide you with a free copy of the audio tape at the end of the interview
  • provide you with a signed copy of the written record of conversation or interview if you ask for one. If we ask you to sign this record, we will explain the implications of doing this
  • respect your right, and give you adequate opportunity, to claim legal professional privilege in relation to certain communications between you and your barrister or solicitor
  • in certain circumstances, allow for some advice to remain in confidence between you and your professional accounting adviser because of the administrative concession applying to professional accounting advisers’ papers
  • provide a written receipt for any records we collect in person at an interview and return the records as soon as possible or as mutually agreed
  • use discretion if, and when, we make any enquiries of third parties and do so without implying any wrongdoing by you
  • allow you to give your views on any relevant issue, including any proposed adjustments, and
  • keep you informed on our progress.
 
 

Important Note: These articles have been prepared for general circulation and are circulated for general informational purposes only; these articles should not be regarded as business or investment advice. The articles represent the views of the writers and are subject to change without notice. Additionally, while every care has been taken in the preparation of the articles no representation or warranty as to accuracy or completeness of any statement is given. An individual or organisation should, before any business or investment decision is made, consider the appropriateness of the information in this document, and seek professional advice, having regard to objectives, situation and needs. This document is solely for the use of the party to whom it is provided.

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