Tax audit activity in 2023

Wealthy Australians and small-business operators, subject to audits and actions against questionable tax deductions, have contributed almost $8 billion in additional payments to the ATO, according to new figures. The ATO engaged in 1.3 million "client engagement activities," including tax audits, resulting in a $7.7 billion boost to the federal government's funds last fiscal year.

Automated systems played a significant role, with nearly half a million real-time prompts during annual returns, saving $61.1 million in revenue. Specialist prompts related to crypto asset sales and over 104 million pre-filled data pieces expedited tax returns and prevented incorrect claims. Sole trader taxpayers received over 11,000 prompts, leading to 16% of them adjusting their annual returns.

ATO focus areas and claim types for 2023

The ATO has focussed its personnel, technology and overall audit focus on small businesses, with a particular focus on:

•   BAS Audits and Reviews
•   Employer Obligation Audits and Reviews
•   Payroll Tax Investigations
•   Covid-19 ATO JobKeeper Payment Audits
•   ATO Excess Super Contributions
•   WorkCover
•   Land Tax

Protecting your clients

The ATO and various State & Federal government revenue authorities in Australia remain steadfast in their commitment to addressing taxpayers who fail to meet their tax obligations. This determination is consistently highlighted in the media and supported by the Australian Government's financial backing and data-sharing initiatives.

As reviews, audits, investigations, and inquiries into taxpayer returns persist, it is prudent for accounting firms to consider tax audit insurance solutions like AuditCover. This end-to-end insurance covers professional fees incurred by accountants and experts in the event of audits initiated by the ATO or other government revenue authorities. This coverage extends to audits related to lodged returns and financial compliance obligations, encompassing activities such as JobKeeper payment audits and reviews conducted post-payment.

Getting your fees paid

If there is a legal requirement to respond to a statutory body's investigation into a tax return or compliance obligation, clients with an AuditCover tax audit insurance policy may be entitled to claim professional fees for your time in responding.

At such a stressful time in your client's business journey, tax audit insurance can help to protect them against incurring additional costs to responding and resolving ATO investigations.

Book a discussion with the AuditCover team to find out how you can start protecting your fees and supporting your clients before it's too late.