Single tax mistake that can trigger an ATO audit: ‘Increase the risk’

Taxpayers are being warned to avoid making one simple mistake if they don’t want to get audited by the Australian Taxation Office (ATO). The tax office contacts around two million people about their tax returns each year and this can trigger an audit for some.

Hive Wise founder Hripsime Demirdjian told Yahoo Finance taxpayers could reduce their chances of getting audited if they simply lodged on time. Individuals have until October 31 to lodge their tax returns, or May 15 if they are using a tax agent.

“It’s a requirement to lodge your tax returns under the law. If you don’t do that, basically it can be perceived to even be a criminal offence,” she said.

“It is something taxpayers should do to avoid an audit in the first instance and also any further actions being taken against them.”

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Demirdjian said one of her clients, who is a business owner, had been selected for an ATO audit because they had a range of tax lodgements overdue for multiple years including income tax returns, superannuation, business activity statements and single touch payroll.

She said the client’s previous accountants had not correctly done their lodgements and, as a result, they were now being audited for the past four years.

“If you’ve got a poor lodgement history with the ATO, you’ve got overdue debts, you’ve got overdue lodgements that does increase your risk whether you are an individual or business owner,” Demirdjian said.

“That flags you that you aren’t a very good taxpayer so to speak and aren’t really taking your obligations seriously so that does increase your risk of being audited.”

Plus, if you don’t lodge a tax return you risk being hit with a $330 failure to lodge penalty. This increases every 28 days you are overdue up to $1,650.

How to avoid getting audited by the ATO

Demirdjian said it was always best to lodge by the due date.

“If you can’t make it for whatever reason, sometimes it’s unforeseen circumstances that the client or even their accountant might experience, the ATO does allow you to request an extension in those circumstances,” she told Yahoo Finance.

“The extension depends on the kind of lodgement that you are dealing with. So there is a bit of leniency there but it’s always best to aim to get it done by the lodgement deadline.”

Demirdjian said to make sure you pay any tax debts on time as well because the ATO could chase you and escalate it to a debt collection agency in some circumstances.

“The ATO can escalate the matter if you’re still not paying and still not lodging. So remain on top of your obligations,” she said.

“It’s also a good idea to always make sure you’ve got all your records and have kept them for up to five years, which is what you are required to do, in case you ever do get audited.

“So you’ve got all that information to back you up and support whatever it is you’ve claimed in your tax return.”

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