An audit from the Australian Taxation Office (ATO) can be stressful — but it doesn’t have to be. With the right records, professional support, and an understanding of what triggers audits, you can confidently manage (or avoid) one altogether.
1. What Is an ATO Audit?
An ATO audit is a detailed review of your tax return, BAS, or business records to ensure everything has been reported correctly. It can cover:
- Income and deductions
- GST reporting
- Superannuation obligations
- Business and personal tax compliance
There are also ATO reviews — which are less formal and often the first step before a full audit.
2. Common Audit Triggers
While audits can be random, common red flags include:
- Unusual deductions (e.g., high work-related expenses)
- Fluctuating or undeclared income
- Late lodgment or non-lodgment of returns
- Cash-only businesses (e.g., cafés, tradies)
- Claiming GST refunds that don’t match income
- Discrepancies between STP (payroll), BAS, and super lodgment
The ATO uses advanced data matching tools to compare your records with banks, employers, Centrelink, and more.
3. How to Be Audit-Ready
✅ Keep Good Records
- Maintain clear invoices and receipts for all expenses
- Use accounting software to track GST, income, and payroll
- Keep a mileage logbook (if claiming car expenses)
- Keep records for at least 5 years
✅ Ensure Accuracy
- Don’t guess income or deductions
- Avoid over-claiming without justification
- Reconcile your BAS, PAYG, and STP data regularly
✅ Be Consistent
- Your income, deductions, and GST should align across all lodgments
- Be cautious of sudden changes in expenses or low declared income
4. What Happens During an Audit?
The ATO will:
- Contact you by phone or letter
- Request specific documents or explanations
- May visit your business or accountant
- Allow you to respond within a deadline
An audit can take weeks to several months, depending on complexity. It may result in:
- No changes (all good)
- Adjustments to tax payable
- Interest and penalties
- Referral to other government agencies (in rare cases)
5. What to Do If You’re Audited
- Don’t panic — it doesn’t always mean you’ve done something wrong
- Contact your accountant immediately for support
- Respond promptly and professionally to ATO requests
- Keep copies of everything you send
Final Tip
Being honest, organised, and proactive is the best defence in any audit. If you’re unsure about any claim or obligation, get professional advice first — it’s much easier to prevent an issue than to fix one after the fact.
Worried about an ATO review or audit?
Our expert team can review your records, communicate with the ATO on your behalf, and ensure your compliance is spot on. Reach out today for a confidential consultation.
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