ATO Audits are conducted when ATO systems detect signs that someone is cheating on their taxes. The Australian Tax Office (ATO) now uses more advanced computers to detect suspicious claims and fraudulent tax returns.
Computer modeling finds tax cheats and triggers ATO audits
A series of 20 computer models run on every tax return, with flags raised on data that looks suspicious.
Wrong or missing information on your return can, at best, lead to delays in your refund. However, it’s not uncommon for the ATO to order a tax audit on your affairs for other years too.
ATO systems reviewed more than 11 million tax returns in the past 12 months. 29,526 tax returns had flags raised. This stopped $132 million going to taxpayers in erroneous and fraudulent returns.
The ATO acknowledges that some tax return errors are accidental. But it isn’t hard to differentiate between genuine mistakes and an attempt to get away with fraud. It’s safe to say that they have seen it all. Consequently, leniency isn’t an option for those who attempt to file a tax return with inflated deductions or missing income.
With vast resources devoted to tax audits for both individuals and businesses the ATO definitely have the upper hand. If you come under scrutiny from the ATO, you may not even realise it until you receive a letter asking you to explain a difference in your return.
What are the main triggers for tax audits?
Each year the ATO focuses on different aspects of tax fraud each year but always pay particular attention if:
- You are not lodging a tax return,
- You have under-reported income,
- They think you have over claimed entitlements.
The ATO will also…
- Pay special attention to the non-reporting of capital gains, the property industry and work-related expense claims.
- Watch for lodgement of business activity statement (BAS) credits on time.
- Benchmark more than 100 industries to identify under-reported or omitted income.
- Continue to be empathetic to those taxpayers and businesses that are experiencing financial difficulties.
- Focus on high income and wealthy Australians.
- Monitor illegal access to or release of superannuation.
- Work with international revenue authorities to counter the use of tax havens.
Remember the ATO can get access to bank accounts, vehicle purchasing records, share economy records (Uber, Airtasker etc.) and much more. So, If your claims don’t fit with their records, a tax audit could be just around the corner. And make no mistake, ATO tax audits are tough.
If you are unsure about any aspect of your tax return get in touch with us! Send a message direct to your accountant at Etax.com.au; just click “My Etax messages” in the upper menu.
Highly qualified Etax staff are trained to help. Our goal is to minimise the amount of tax you have to pay and maximise your refund – legally! So we help you avoid ATO audits and refund delays.