Review or Audits:

From time to time, the ATO may conduct a review or audit upon you as an individual or your business. A review or audit usually involves examining your taxation and financial affairs to ensure they are accurate, at the correct level of disclosure and comply with your taxation obligations. The ATO may also contact other parties that you deal with to ensure the accuracy of the information. These parties may include banks, employers, customers and suppliers. Under the law, reviews and audits are both considered 'tax audits' but there are significant differences between the two. Specialised and tailored advice from one of our Taxation Lawyers can be hugely informative and useful in this regard.

A review is a process in which the ATO assesses whether or not there is a risk that you are not complying with your obligations. The ATO checks your records for any errors, potential or real, and may request for further information, clarification or correction. The ATO may use reviews to collect information about particular industries and activities. If during a review, you discover any errors and provide details during a review to help the ATO correct those errors, they may significantly reduce any penalty that may apply. The ATO has discretion to reduce or waive any errors for a number of reasons, such as innocent mistake or misunderstanding of taxation law. In addition, if there is evidence to suggest that you may have purposely sought to evade your taxation obligations there may be significant penalties that apply which includes criminal penalties. If there is evidence uncovered during a review seems to suggest that you have not met your obligations, the ATO may decide to conduct an audit.

A tax audit is a systematic examination of a taxpayer’s affairs by the ATO in order to determine whether the taxpayer has fully complied with the tax laws. This includes whether the taxpayer has disclosed all assessable income and has correctly claimed deductions or tax offsets in the income years concerned (an audit may cover more than one year). The ATO’s audit programs are also designed to promote voluntary compliance with the tax laws and to help the ATO identify areas of law that may need clarification. An audit is conducted when the ATO forms the view that you may not be complying with your obligations or that a review is insufficient to examine your tax affairs properly. The ATO may seek to correct any discrepancies they find, which may include collecting monies that you owe them. Of course, if you are cooperative and frank during an audit, and decide to inform the ATO about any errors and provide details to help them correct those errors during an audit, the ATO may reduce any penalty. Furthermore, if you decide to inform the ATO about any errors and provide details to help them correct those errors before they notify you of an impending audit, the ATO exercise its discretion to significantly reduce any penalty or fine.

If you need further legal or financial advice on your taxation matter from our highly skilled team of financial advisors and lawyers, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au. 

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