Have you ever been audited?

Would someone be more likely to be audited if they did their own tax than used an accountant?

Given the quality of accounts I provide to my accountant (which he agrees considerably reduce his workload in preparing my accounts) I'm starting to struggle to see what value he is adding. Reduction in likelihood of an audit would be one potential item.

 

I was "reviewed" last month
Lodged my quarterly BAS as a sole trader and was due a substantial refund (due to gst refund after property purchase)
This large refund flagged me
I was notified by SMS to call the ATO
Two calls and emails of purchase contract and settlement statements and it all went away

Is audit sheild worth it, probably not for personal
I am a sole trader and run a business, I didn’t bother with it.
Have a good accountant, resist making dodgy claims and
"KEEP GREAT BOOKS"
(they can audit me anytime, here's 25 boxes covering the last 10 years, no you can't take them away, that'll keep you busy for a few weeks, email me your questions )

 

Yes you would be more likely to be audited. A tax agent provides some level of trust to the ATO.

I am not an accountant but your second paragraph implies that you see accountants as just inputers of data. But don't they put the data in the right spot, tell you what you cannot claim and what you can claim and suggest things you haven't claimed?

 

We have had a few high net wealth families audited as part of an ongoing process and the fees are very high. These people have tax audit insurance through their broker.

Small vanilla returns are rarely audited. If your travel, repairs or interest are high you are more likely to be audited

 

Yep, I imagine they have a statistical filter and if you're an outlier it might prompt further looks.

 

However your general broker is best placed to arrange insurance cover.

If you do get audited and you call upon the advice of your accountant they should get paid for helping you. Some people think that being audited is the fault of the accountant who should wear the costs of assisting. That is simply wrong.

 

We got Auditshield for the first time this year as our dealings became more complicated, larger claims (BAS/GST) and dealings with other non related companies which are known to be red flagged at the ATO. It's probably only a matter of time before we are audited and it will cover our accountants time to deal with the audit.
I'm against insurance for insurances sake and hadn't wanted it but it's time for us to do it.

 

I believe the ATO runs all returns through programs that work out the average for all sorts of situations, then flag those that fall outside the norm.

Son did his own return, was audited because he had very low rental income and high deductions for a new-build rented holiday house. Phone checks confirmed it was actually available for rent for the times claimed and that the rental asked was within the average market range. A couple of phone calls and ATO was satisfied.

My brother (used an accountant) was regularly audited for high car expenses. He worked on the relieving staff of a medical company and travelled extensively to different assignments. Meticulous records meant he passed every audit with no hassles.

Both were only asked about the relevant issue so both knew what sparked the audit.
Marg

 

Accountant advised we were going to get audited but it never happened.

My accountant advised that some 70% slip through because ATO do not have the resources.

 

At the end of the day its very simple if you are not doing anything dodgy there should be no reason to fear an audit.

I would much prefer savvy, smart accountant over the Heinz variety, in my case it could $100K difference in tax savings by strategizing, nothing illegal of course, that would be like cutting your nose despite your face.

The ATO takes more than enough bites as it is, developers pay stamp duty, CGT, GST
tax tax tax..... ATO is our JV partner

 

I was audited a few years back.
I was selected due to their data matching which aligned incoming bank deposits as higher than my declared income.

It took about 12months and best part of $10k to get through.

However I had to demonstrate that I was a genuine non-resident. Starting 5years prior.

In saying that I don't think I would pay for insurance. If you aren't doing anything wrong you shouldn't have too much to worry about. And 95% of people will have reasonably easy returns.

Blacky

 

That is VERY normal. Unfortunately audits dont run that way. You are more likely to be audited because of who you slel to or buy from....Here is how it works.

ATO audits a stationery supplier and ask a number of questions about how it keep records. Does it do bank rec etc etc. They then seek 3-5 supplier / customer invoices. Then they audit those same 6-10 businesses and repeat process. That leads them to you. Repeat process......

They are always looking for :
- Data entry without tax invoices
- Suppliers with no ABN etc and poor tax invoice requirements
- Busineses that have poor record keeping
- Cash suspicions...eg 10 waitstaff but only three employees on payroll
- Inconsistencies : eg Buying 35kg of coffee beans a week but only report coffee sales of $10K pa. They will immediately suspect cash used to pay workers.