Tax Office Visit: Meaning, Purpose And Preparation For A Smooth And Seamless Visit

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The Australian Taxation Office (ATO) definitely means business as they intensify their objective to eliminate, apprehend, and prosecute illegal business operators (black market) in the country. In fact, they are even going geographic-specific with their hunt.

Around 10,000 businesses are expected to receive a visit from tax office personnel, around 1,800 of which in various states. According to Smart Company, these areas are as follows:

  • Dandenong, Victoria- up to 700 businesses,
  • Richmond, Victoria- up to 500 businesses,
  • Maroochydore, Queensland- up to 400 businesses,
  • Northern Territory- up to 200 businesses across Katherine, Batchelor, Bees Creek, Adelaide River, and Pine Creek.

These areas were selected for reported black market activity with reports on statistical anomalies, such as areas with a higher number of businesses not registered for PAYG or GST.

Also, businesses which operate and advertise as “cash only,” those that indicated unrealistic income in lieu of their assets/lifestyle of the owner, and ones unable to meet super or employer obligations are more likely to receive a visit.

If and when Tax Office pays a visit, what’s expected to happen next?

  • ATO officers may ask for the sales record which covers the past few days or even the historical ones.
  • ATO officers may also scrutinize the company’s payroll process. The tax office is expected to be meticulous regarding recording and documentation of payroll- with stress on employees’ superannuation entitlements being met.
  • If anomalies and inconsistencies in records are detected, only then will further action be taken. It shall be explained in detail by the tax office personnel.
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Preparation is the key!

Preparation is important in everything- including a visit by the tax office. To take the stress away, preparing important documents and records are essential. If businesses are able to provide a seamless and organized record (free from inconsistencies and anomalies), the tax office personnel proceeds to the next business. Ensure that the business is ready with the following at all times:

  • Spotless, error-free, easy-to-understand, and straightforward records especially if the business transacts in cash most of the time,
  • Ensure paperwork is current and updated. It should include invoices for services provided, liquidated receipts, detailed employee payslips, and cash taken out of the business,
  • Having a separate bank account for the business is of utmost importance. A personal bank account used for the business is most likely to raise a Red Flag.

In conclusion

RELAX. Again, if nothing is violated and everyone has done their part to be ATO-compliant, the visit shouldn’t be worrisome. Excessive and observable tension or nervousness might send Tax office personnel an alarming signal.

PREPARE. Have all documents and records ready. If needed, get the services of a third-party to assist with this need.

PRESENT. Present all documents that need to be presented. Be ready to answer all questions asked. If due diligence is done, all questioned items are accurately answered which take away suspicions of anomaly and inconsistency.

Disclaimer

Since ATO visits are underway, businesses must be prepared to present important records and documents. It should ensure the tax office that there are no inconsistencies and other anomalies. In the end, such ATO crackdown significantly reduces the black market activity in the country.

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