Who’s most at risk of a Tax Audit?

As tax advisors and accountants, we make all efforts to prepare your financial accounts and tax returns as accurately as possible. However, no one can control the Australian Taxation Office (ATO) or other government revenue authorities from randomly instigating audit activity on you or your business.

In 2016, the Australian Taxation Office (ATO formed the Tax Avoidance Taskforce. The Taskforce was formed to ensure that many different types of Taxpayers are paying the correct amount of tax. This can include an Audit of (but not limited to):

  • Businesses
  • Individuals
  • SMSF and other trust arrangements
  • Rental Properties
  • Work-Related Expenses

Who is the ATO targeting for audits?

When an audit hits, it is often a result of a specific crackdown through a variety of data matching or other artificial intelligence sources. These methodologies have proven to work very well and there are no signs to show that the ATO or other government revenue authorities with ease up on these.

Our partner Audit Shield compiled a list of audit insurance claims for the 2021- 2022 financial year and has reported the following top 6 areas of interest:

Audit Insurance Claims 2021-2022
1 July 2021- 30 June 2022 Audit Shield service claims across Australia

1. Employer Obligations (PAYG/SG/FBT) 13.47%
2. Income Tax (Full General Combined) 13.03%
3. High Wealth individuals 10.94%
4. Payroll Tax 10.32%
5. BAS (Pre and Post Assessments) 8.88%
6. Income Tax for Rental Properties 7.38%

In the 2019-2020 Federal budget, a further $1 Billion (Yes you heard right, “Billion”) was committed to further extending this Taskforce’s operation into 2022-2023. So far, this task force has helped raise an extra $4.5 Billion in tax liability for the ATO – A very profitable exercise!

More information about the task force can be found on the ATO website. 

How likely am I to be selected for audit activity?

Data matching has become more and more sophisticated each year. The introduction of Artificial Intelligence (AI) has made it easier and far more likely for taxpayers that have previously been untargeted to encounter an audit activity, despite compliance. The ATO, along with other relevant government revenue authorities have unprecedented access to taxpayer records, allowing them to specifically target previously unreviewed tax returns. Now more than ever you could be at risk of audit activity.

How can Morrows Help?

With audit activity on the rise, we believe it is an opportune time to offer our clients Audit Insurance to protect you against unplanned professional fees which may arise as a result of audit activity.

Keep an eye out on your emails with a special offer being released in April. If you have any questions regarding audit insurance, please reach out to your Morrows advisor.


Want to learn to minimise your 2023 Tax Bill?

Our advisors have prepared two 2023 Tax Minimisation guides. These guides outline the various strategies we can consider to help reduce your personal or business tax bill this financial year. Fill in your details below, to gain access to these guides for free.

Tax Minimisation Strategy Guides

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