Last year, the ATO paused its debt recovery, audit and lodgement activity at the height of the Covid-19 concerns.

There has been a slow restart to compliance action since the end of 2020.   However the ATO reports tax and debt outstanding of $53 billion, so there is likely to be more collection and audits over coming months.

There are reports of stronger enforcement on lodgements (BAS, income tax, SMSF's), calls to set up payment arrangements or to remedy payment defaults, and intention to audit GST and income tax returns.

While government assistance continues perhaps a business may be left alone, but from the end of March that could change.

We have recently completed an ATO audit of a client's business for a previous year, it was essentially a systems audit to ensure BAS and tax returns were prepared from reliable records.   The ATO requested the full ledger for the year, bank statements and chattel mortgages, selected documents it wanted to see, sighted log books for vehicles and the payroll   records, and required explanations and proof for adjustments and errors.   BAS and tax were mostly right so there was very little tax to pay, but the cost was more than the cost of preparing the returns in the first place.

The point is, consider audit insurance which is valuable and very reasonable.   In the case above it paid for the whole cost (but not the tax due).   Some insurers also cover any statutory returns, whether federal or state.   The insurer we recommend is Accountancy Insurance (Audit Shield), and offers have just been sent out for the next year coverage.   It is a low cost in relation to the costs of a full GST or tax audit.

The message is to expect more compliance and collection action.   If the ATO does contact you (a real call, not a scammer) please call us right away.