Close this search box.

How to avoid being the subject of a dreaded ATO audit

You’ve read it in the news. You’ve heard people talking about it. Those in the know urge you not to dismiss it. Being the subject of an ATO audit is not to be dismissed as a trivial matter. It can and does happen. In fact, ATO data from the 2017-18 financial year reveals that more than 1500 taxpayers were audited over their rental claims alone and that around $1.3 million worth of penalties were handed down.

Sometimes audits are unavoidable. This is generally a result of an ATO crackdown, not the amount of time and effort that has gone into preparing the returns. However, there are crucial steps you can take to offset the likelihood of your tax return falling prey to the dreaded ATO audit.

Here are our top 4 tips to avoid an ATO audit

Backing up your claims

The ATO is clear on what it expects from taxpayers. If you’re not sure, the ATO website provides a range of resources to help you understand your obligations. This includes information on specific topics such as work-related expenses, rental properties, capital gains tax and more.

It’s important to remember that the ATO can request records to substantiate your claims. This might include receipts, invoices, bank statements and other documentation. If you don’t have records to back up your claims, the ATO may and will disallow them.

Getting it right

It’s also important to get your tax return right in the first place. This might seem like an obvious statement, but it’s one that is often overlooked. The ATO had to adjust over 112,000 tax returns lodged for the 2017/18 financial year, correcting $53 million worth of errors.

There are several ways to ensure your return is as accurate as possible. First, check that you’ve reported all your income. This includes income from employment, investments, rental properties, and any other source.

Next, check that you’ve correctly claimed all deductions, offsets and rebates that you’re entitled to.

Record keeping

If you happen to be a self-employed or run a small business, you know the importance of keeping excellent records. However, good record-keeping practices are essential for all taxpayers. Not only do they help you offset the chances of being the subject of an ATO audit but keeping a record of your tax receipts, invoices and other financial documents can clue you into claimable expenses you forgot about. If you want to follow the sage life advice of treating yourself like a business, maybe it’s time to take the reigns and get organized by keeping better tax records. The ATO requires you to keep records of your income and expenses for a period of five years. This includes receipts, invoices, bank statements and any other documentation that supports your claims.

Doing your math

It might sound simple, but it’s easy to make mistakes when you’re dealing with numbers. Be sure to check your calculations and that you’ve entered the correct figures into the right fields. This could mean whipping out the trusty calculator. Or, if you happen to be using the latest MyTax optimisation software, you will have easy access to automated tax tools that check everything and make the correct calculations for you.

Final thoughts

If you take the time to understand your tax obligations, keep good records, and have a good system you won’t have to worry if the ATO ever does come knocking. The team at TaxTank have put together a powerful tool that takes the stress out of managing your own taxes and makes it easier to get a better tax return. TaxTank not only helps you avoid an ATO audit, it also emboldens you to maximise your tax return by claiming everything you are entitled to (legally, of course!). Start your free trial today and you’ll quickly discover you have nothing to lose apart from your fear of the dreaded ATO audit, of course!


TaxTank Reviews


Important Tax Deadlines

For all incomes earned between 01 July 2023 – 30 June 2024.  

Tax returns can be lodged from 01 July 2024. You can prepare early with TaxTank so you know exactly what’s going on ahead of time.

For all incomes earned between 01 July 2022 – 30 June 2023.  

Tax returns are now OVERDUE.  

You can use TaxTank to get up to date and lodge with our partner accountants.

Tax returns are OVERDUE.  

You can use TaxTank to get up to date and lodge with our partner accountants.

More Posts