A number of factors can trigger an Indirect Tax Review. These include, but are not limited to:
Data Matching: The ATO has access to vast amounts of data and can cross-check the information provided in tax returns with other data sources. Discrepancies can lead to further investigations.
Random Selection: Sometimes businesses can be selected at random, as part of the ATO’s Justified Trust program.
Referrals or Tips: The ATO may receive information from third parties that suggest non-compliance.
Industry Benchmarking: The ATO uses benchmarks to identify businesses that may be reporting outside the norm for their industry. If a business’s financial performance is notably different than others in the same sector, it may trigger a review.
History of Non-compliance: Businesses that have a history of non-compliance or have been identified in previous audits are more likely to be audited again.
Large or Unusual Transactions: Large, one-off, or unusual transactions that do not seem to fit the regular business pattern can raise flags.
Late Lodgement: Consistently late lodgements of BASs or other necessary returns can draw attention.
Connections to Other Non-compliant Entities: If a business has transactions or affiliations with other entities that are non-compliant or under investigation, it may increase the chances of an audit.
International Transactions: Businesses involved in significant international transactions, especially with low-tax jurisdictions, may be scrutinised more closely.
Changes in Business Performance: If there’s a sudden or significant change in the business’s financial performance without a clear reason, it might prompt the ATO to investigate.
Industry Focus: From time to time, the ATO might target specific industries or sectors that are deemed higher risk for non-compliance.
It’s essential for businesses to maintain accurate and complete records, ensure timely and accurate reporting, and seek advice when unsure about tax matters. If selected for a review, cooperation with the ATO and providing the required information promptly can make the process smoother.
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.
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