Extax Advisory
Jul 27, 20213 min
Updated: Sep 3, 2022
While COVID may have relaxed the approach of the ATO, we are seeing a return to compliance activities. Whether you are a CFO, in finance, or you are responsible for GST in your business, having the ATO seeking further information in anticipation of an audit may cause some concern.
While it is "just" 10%, you may quickly start wondering how much it adds up to if you get it wrong. Are you aware of all of the ATO's GST Public Rulings that may affect you? Have you upgraded software and did you get it all reviewed and tested?
What if your staff is intimidated and say the wrong thing to the ATO, will that open you up for more trouble?
Here are some essential tips to prepare for an eventual GST review by the ATO on your business:
The ATO is not the enemy
Many businesses panic, or get angry when they first hear from the ATO because they do not know what they are after, and question their real motivation. This is a very human emotion that even incumbent generalist tax advisers often experience if GST is not their sole area of specialization.
However, the ATO is not the enemy and should not be feared. Reacting in panic raises the wrong emotional approaches that we often see spiral into more work.
What NOT to do
Do not put up walls, the officers have seen hundreds of businesses and a range of stakeholders in various states, they will simply look past any walls that are put up.
Do not behave too cold and do not demand everything in writing. Doing may just push the ATO officer to send an extensive set of questions to answer to within a very short time frame.
Do not provide the ATO with the absolute minimum information at the last possible moment.
Do not provide the ATO with what they don't need or complicate matters for officers.
Do not expect nor plan for them to immediately provide you with the most favourable outcome in the shortest time frame.
What to do
Establish a respectful rapport and find out what the ATO really need, and what they require in the first round to be able to go away with reasonable comfort.
Understand that the ATO officers may not know exactly what to ask you for in the first instance, as you know your business better than they ever will.
Work with them to provide them with a general understanding of the business and what they need to be able to finalise their enquiry.
Take charge of the process as best you can.
Find ways to bring their enquiry to a favourable end as soon as possible without escalation to a full audit investigation.
Should you seek specialist help?
Most businesses would never knowingly take a gamble on anything that could instantly take 10% of their top line, for some businesses this may even exceed the total net profit. GST often poses such a risk in two different ways:
Having ongoing GST liabilities that one is unaware of, with the risk of the ATO recovering GST on four years of past dealings, plus penalties and interest. That could be in relation to GST issues that your business deals with every day and you "thought you had under control".
There can be occasional non-standard one-off transactions such as property dealings, mergers, acquisitions, investments, establishing market joint ventures etc. Does the other side know more about how GST affects that transaction than your business does? The GST implications of these might not be your area of experience and are often not the expertise of most generalist advisors who do not solely specialise in GST.
It is important to seek the help of a trusted GST specialist adviser who is highly respected by the ATO, who has extensive knowledge of GST laws and is even invited by the ATO for consultation on writing GST legislation.
Please contact us if you wish to be connected to one of the leading GST advisers in Australia.