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Keeping out of the tax spotlight: Tax
Keeping out of the tax spotlight
By Greg Hayes
The end of the financial year has come and gone but that doesn’t mean you can become complacent about the role of tax in your business.
The danger is that the pressure of business and the opportunities you are chasing cause you to overlook some of the basics.
It is too easy to say, “I’ll fix that up later.” And it’s also dangerous.
The easiest way to be caught out by the ATO is not to be able to produce source information if they ask for it.
Here is a quick list to make sure you have everything in place:
If the Tax Office comes looking, these are basic source documents they will expect to see: Don’t have them and you are at risk.
These are also not actions that you should leave your accountant to manage with the finalisation of your financial statements.
If they are going to assist you with them, then have it done now.
The longer the period of time between when the action was taken and when the documentation is completed, the more you expose yourself to the risk of the Tax Office saying that the action was not taken before the end of the financial year.
And almost invariably this will mean an argument and possibly more tax to pay.
Where you operate in an industry where the ATO publishes benchmark statistics, make sure that you test your end of year numbers against the ATO benchmarks.
If you are outside of their benchmarks, this does increase your likelihood of a review.
However, the main issue is not whether you are within their benchmarks. It is more knowing if you are, so that you can identify the possible reasons.
This may help in managing any queries that occur. Check off the list and this will help to keep you out of the spotlight.
Greg Hayes is a director of Hayes Knight and specialises in taxation and business planning advice.
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