This article highlights some information relating to the frequent problems of tax audits, failure to lodge tax returns, and the trouble of paying the tax. Some thoughts and instructions are suggested to help constructively decrease or resolve these problems.
Tax Audits:
Tax authorities require to review selected individuals for tax audits or questioning. These audits are usually targeted at occupations, industries, and individuals who are considered “high risk”. Tax audits can inspect either non-disclosure of income or over-claimed deductions. In Australia, the ATO is accountable for assessing and collecting income taxes. Naturally, they also start tax audit programs and collect taxes.
The majority of tax audit activities are commenced by two methods the first is data-matching (comparing data held by the ATO with information obtained from other institutions eg banks, other tax authorities, or other government agencies). The second method is by targeting “high risk groups or transactions eg the building and construction industry, the “cash economy”, property transactions and negatively-geared properties.
Tips to Tackle a Tax Audit:
Like various issues in life, the solutions may not be as complicated as they seem. The following steps should help in many instances:
Recognize precisely the trouble of account and bookkeeping. Have an enthusiastic accountant professional or accountancy firm inspect the subject thoroughly and professionally: often, the problem is not as big as you think. Many taxpayers panic because they either cannot place the problem, or they(usually incorrectly) assume that the tax authorities may take a harsh and uncompromising response.
Get hold of all the significant information you can. Usually, it is essential for an accountant professional to have your data presented to them in chronological order. Don't worry that there are gaps or missing documents… there is generally a method of sourcing lost information or coming to a satisfactory solution.
Create a plan of action with your accountant professional and commit to following it through. This plan should include a schedule of activities, identification as to which party is accountable for which task, and some estimate of the costs involved.
Tax Payments:
Individual financial crisis can mean that taxes either do not get paid on time or in some instances. Large arrears of tax are financially embarrassing and attract interest costs and an increased tax audit profile. Most tax authorities (especially the ATO) are happy to reschedule tax payments when there is demonstrated financial hardship. In some cases, it is likely to apply for and get full tax relief. In most instances, it is likely to negotiate some reduction or remission in interest and penalties.
