An Indirect Tax Review focuses on the indirect taxes a business or individual is liable to pay or has claimed.
Here’s an overview of the scope of an Indirect Tax Review:
- Goods and Services Tax (GST): This is a significant area of focus. The audit will review:
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- The correct reporting of taxable sales and purchases.
- Any GST credits claimed by the business.
- The accuracy of GST classifications (i.e., whether transactions are correctly identified as taxable, GST-free, or input-taxed).
- Proper documentation supporting the GST transactions (like tax invoices).
2. Luxury Car Tax (LCT): For businesses dealing in luxury cars, the ATO may review the correct calculation and payment of LCT.
3. Wine Equalisation Tax (WET): For businesses involved in the wine industry, the ATO may assess the correct calculation and payment of WET.
4. Fuel Tax Credits (FTC): The ATO may review claims for fuel tax credits, ensuring that claims are accurate, supported by appropriate evidence, and are made for eligible activities and fuel types.
5. Customs Duties: Though this is more under the jurisdiction of the Australian Border Force, there can be overlap with ATO responsibilities, especially in terms of valuation of goods, correct tariff classifications, and applicable concessions or exemptions.
6. Excise Duties: For businesses that manufacture or deal in products such as alcohol, tobacco, or fuel, the ATO will ensure the correct calculation and payment of excise duties.
7. Compliance with Reporting Requirements: The ATO will ensure that businesses are lodging their Business Activity Statements (BAS) and other relevant reports on time and accurately.
8. Record Keeping: An essential component of an audit is assessing whether the business maintains proper and accurate records as required by law.
9. General Behaviour: Part of an audit may also involve assessing whether there’s an indication of evasion, aggressive tax planning, or other non-compliant behaviour.
10. Other Areas: Depending on the nature of the business and the specifics of the audit, there may be other areas of focus too.
During an Indirect Tax Review, the ATO will typically:
- Request specific documentation and records.
- Ask questions or seek clarification.
- Visit business premises if necessary.
- Assess the overall compliance with indirect tax obligations.
It’s always advisable for businesses to seek guidance from a tax professional or consultant when facing an ATO audit to ensure they understand their rights, obligations, and any potential liabilities.
BTG can help.
BTG International has helped some of the worlds most respected companies prepare for and/or manage Indirect Tax Reviews. Call us on 1300 650 258, email contact@btgi.com.au or leave your details and we will be in touch.
To view more articles from our ATO Indirect Tax Reviews mini-series, click here