After a challenging year for many businesses due to COVID-19, more normality is returning, including the recommencement of audits by the ATO. While the regulator is committed to working in tandem with those that are struggling, they are refocused on ensuring good compliance is upheld too.
Being faced with an audit can be stressful and overwhelming – with the timing often unexpected. Businesses can find themselves affected by a number ATO focuses, like the current tax risk review programs. Therefore, it is important that businesses, and their reporting and documentation, is ready for ATO auditing.
How to prepare for an ATO audit
There are key steps that businesses should take to ensure they are 'ATO ready'.
- Ensure that a robust tax risk management system is developed and maintained. This includes Board policy documents on tax risk profile and tax risk profile of the business, as well as documented policy and procedures relating to tax administration within the organisation. An up-to-date tax risk register is also required.
- Companies need to be aware of specific tax issues relevant to their industry. The ATO regularly highlights particular tax issues that it is looking to examine in more detail, so it pays to be on top of anything that is on the ATO radar.
- Anything outside of ‘business as usual’ activity will always be of interest to the ATO, so clear consideration of the tax implications is required. This would include such activity as merger and acquisitions, group restructures, overseas expansion or transfer of business activity both within group companies, or overseas.
- The ATO is always keen to look at any material differences between a company’s accounts and tax return, so a clear understanding and justification of the book to tax reconciliation is essential.
How we help
At Grant Thornton, our team of experts provide support across the whole process to ensure ATO requirements are met, including:
- helping clients respond to requests
- undertaking a pre-governance review
- conducting a gap analysis
- drafting any necessary documentation
- supporting you through any ATO review or audit.
We can assist you with the drafting of all your tax governance documentation, the review and upgrading of your existing systems and operations, as well as provide the regular external review that the ATO looks for when undertaking any review or audit. All these actions reduce the risk imposed on Boards and Management, and as your advocates, we can help you navigate the potential minefield of any ATO activity.
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