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Supercharge Your Superannuation & Maximise Your Retirement Savings

Welcome back everyone. In the sixth and final part of my blog series, I want to discuss something that affects all of our financial journeys: Superannuation. Perhaps you’re concerned about your retirement savings? Or maybe uncertain about how to make the most .....

Wealth - 3 min read

Recently, the Australian Taxation Office (ATO) has updated their approach to the tax compliance of small-to-medium enterprises (SMEs) and wealthy individuals in Australia.

What does this mean for you?

It means that that more SMEs and wealthy individuals are going to be targeted for tax investigations, based on the ATO’s perception of the “risk” that the taxpayer may not be complying with tax law.

More specifically, the ATO has identified and explained their framework as to what constitutes “higher risk” taxpayers, and targeted them for a higher level of compliance activity. Broadly, the bigger your business, the larger your wealth, the more complex your affairs and the less “compliant” your tax history is, the more likely it is that you will be selected for an audit.

It’s important to note that even if you are 100% compliant and have perfect tax records, a tax investigation is still possible and often a costly process for the taxpayer. The scope of many tax audits are usually well beyond the scope of the assignments we are frequently involved with on behalf of our clients, notably annual financials or tax returns.

So it’s no fun for anyone to acknowledge the reality that there are always more costs involved in preparing a specific response to the ATO’s questions and finding and presenting all the documents relating to all the requests they have. These investigations sometimes run for weeks or months. Don’t fall into the trap of assuming that you or your business are somehow immune to this potential distraction and costly disruption.

What can you do?

Obviously as a minimum it’s essential to keep good records and have financials and tax returns professionally prepared and lodged on time – so be consistently compliant. For significant or large unusual transactions and complex situations, always seek specific professional advice. Consider engaging your adviser to conduct a risk assessment audit every few years to identify possible tax risks. Consider tax audit insurance which can cover the costs of responding to an ATO investigation. In short, be as prepared as possible and acknowledge that it will probably happen sometime.

Click here to read the details of the ATO’s new tax compliance approach.

 

Not sure if you're in the ATO's spotlight?

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