The Australian Taxation Office (ATO) is on a mission to bridge the $6 billion gap between receipts and what they believe is owed. Business owners, take note! The ATO is ramping up GST audits, and bookkeepers are sounding the alarm.
The Australian Bookkeepers Network (ABN) has sent out a crucial warning to its members in the financial realm. It seems that the tax office is keen on GST compliance, and Business Activity Statement (BAS) and tax agents should brace for a surge in audits.
Peter Thorp, Director of ABN, emphasized that conscientious record-keeping is now more essential than ever. He underlined, “Bookkeepers can have a significant impact on an audit’s outcome. Accurate financial records and timely compliance are critical in shaping a favorable audit result.”
The ATO has provided a set of indicators that they take into account when choosing targets for audits. These red flags include:
- The magnitude of your turnover and GST liability.
- Noticeable discrepancies from your prior GST filings.
- Your track record of compliance in the past.
- Consistently delayed lodgments, extension requests, and tardy payments.
- Businesses in the retail sector and those with substantial cash transaction volumes.
- Industries involving significant, intricate transactions, such as property.
- Financial records that diverge from the norms established within your industry.
- Inconsistencies between your income tax and GST records.
- The extent and frequency of GST refunds.
Mr. Thorpe urged bookkeepers to stay updated on the latest GST regulations and audit processes. He also encouraged the adoption of specialized accounting software and tools tailored to GST compliance, which can automate various aspects of the bookkeeping process.
“Even with proactive measures in place, audits can still happen,” ABN cautioned. They offered a set of good practices for bookkeepers to implement:
- Identify problem clients: Recognize clients with potential compliance issues and help them rectify their financial matters.
- Ensure data quality: Stress the importance of data quality and accuracy, encouraging clients to get it in order before lodging a BAS.
- Utilize AI for data validation: Employ AI tools like Dext and XBert to validate data integrity and accuracy.
- Emphasize record-keeping: Highlight the significance of meticulous record-keeping, ensuring it aligns with industry norms and regulations.
- Understand the ATO charter: Familiarise yourself with the ATO Charter, understanding the obligations it places on ATO conduct.
ABN disclosed that the ATO’s estimate for the GST gap for FY22 was a staggering $8 billion, up from just over $6 billion in the previous year. The heightened GST audit activity by the ATO is a response to widespread GST fraud fueled by social media over the past two years, which is believed to have cost around $1.6 billion.
In reaction to this, the ATO set up Operation Protego and took action against more than 56,000 taxpayers, pursuing criminal prosecutions.
Take Action Now
Considering the heightened attention from the ATO, it is crucial for business owners to take the necessary steps to ensure their financial compliance. To protect your business from the potential challenges of GST audits and compliance issues, we strongly advise you to seek guidance from Flexible Bookkeeping Solutions. With our expertise and customised solutions, we can assist you in navigating the intricate landscape of GST regulations and guaranteeing that your financial records are in perfect order.
Don’t wait until it’s too late! Contact Flexible Bookkeeping Solutions today and fortify your financial defenses. Your business’s future depends on it.
