The ATO is planning on restarting its tax audit activities in October according to a recent parliamentary commission. The exact date will hinge largely on COVID-19 developments and therefore the office has set October as a tentative time frame for the redeployment of resources into auditing functions.

The ATO hit pause on tax audits in light of changing circumstances

The ATO has indicated that its tax-audit task forces will pick up where they left off before the coronavirus pandemic hit Australian shores and wreaked havoc on the domestic economy. In light of the unprecedented government response in the form of various stimulus packages, such as JobKeeper, cash-flow boost and early release of superannuation, the ATO has focussed its personnel and resources on rolling out these fiscal measures.

As a result of this redirection, many accountants and business owners are wondering when they can expect tax audits to start up again. Given the fluidity of the situation, no hard date has been set by the ATO.

Will Victoria’s stage 4 restrictions factor into the start date?

The last announcement around the tax audit restart date pencilled in August to September as the period where the ATO would get back to its regular tasks. These announcements were made before Premier Daniel Andrews imposed new stage 4 restrictions off the back of declaring a state of disaster in Victoria. While this grace period has given Australian taxpayers, including the broader business community, some breathing room, it has also meant that there is an ever-growing backlog that will eventually need to be resolved.

Where do the accountants stand on the matter?

Accountants know and understand that this grace period will come to an end and acknowledge the necessity of the ATO recommencing its usual mandate of carrying out tax audits. Given the situation has evolved differently in each state, it is likely that the ATO will look to first focus its tax audit efforts on those states with more relative economic stability.

What will happen with JobKeeper 2.0?

The ATO recognises that many will need guidance and education to better understand and respond to the JobKeeper 2.0 eligibility criteria. Included in this is the requirement that from 28 September, businesses must be able to demonstrate the requisite turnover decline using actual GST turnover for the September quarter if they wish to access the new financial support payments for full-time and part-time workers.From 4 January, these new payment structures for full and part-time workers are set to shift again, and businesses will need to keep across these changes as the situation develops. For more information, it is worthwhile checking out the JobKeeper Payment Fact Sheet so that your business does everything in its power to avoid getting a letter from the ATO saying  “The ATO has selected you for a tax audit”.

How can tax-paying businesses and individuals prepare?

As a business owner, tax audit insurance can save you from having to pay your accountant’s professional fees, and as an accountant it can save you from having to request these funds from your clients. The key message here is that once an audit is underway, it may already be too late to get covered.

AuditCover provides a simple solution without a drawn-out claims process. To protect against paying unexpected professional fees, get in touch to get a quote today.