Receiving an Audit Letter from the Australian Taxation Office (ATO) can be a very stressful experience, whether it relates to your personal or business affairs. This brief article is intended to provide a basic guideline of the steps you should take following receiving an audit letter and should not be taken as a substitute for legal advice.
What is in an Audit Letter?
An Audit Letter will usually contain:
the reason for the audit;
the scope of the audit;
the information the ATO wants you to provide;
the period of time under review;
the deadline for your response;
the manner in which you should respond; and
the timeframe the audit will take place in.
Contact an Experienced Tax Lawyer
It is never a good idea to respond to an Audit Letter without first receiving specialist advice from a tax lawyer. Before you make any arrangements to contact the ATO you should be fully aware of your rights and obligations which a lawyer will help you understand, and any correspondence with the ATO regarding an audit will undoubtedly be better prepared by a tax specialist than by yourself.
This is the case whether or not you have a good knowledge of your tax affairs and/or believe that there has been a mistake by the ATO.
Collate your Evidence
Before you meet with your tax lawyer you should make steps to collect as much of, if not all, the relevant evidence in your possession. This will likely include:
the Audit Letter itself;
any correspondence you have had with the ATO;
any documents exchanged with your accountant or tax agent;
a copy of all relevant tax assessments;
a copy of all relevant income tax returns; and
any other document which supports your claims.
What is Expected of You During an Audit
In correspondence with your tax lawyer and when responding to your Audit Letter you should:
be truthful;
provide documents which are correct to the best of your knowledge and belief;
provide timely responses to requests for information; and
advise the ATO of any possible delay as soon as possible.
If you provide false or misleading information to the ATO, you may face extremely heavy penalties including criminal prosecution.
What if I Ignore the Letter?
If you ignore the letter without giving a reasonable excuse you will receive a very heavy penalty from the ATO. If you have a good reason for not being able to comply with the ATO’s requests in the specified period, you should communicate your reasons to your solicitor and ask them to pass the information to your ATO officer. The ATO officer is not bound to accept your excuse and may require further information before making a determination about whether to grant an extension.
If you have received an ATO audit letter, contact Dormer Stanhope today for specialist advice and representation.