Tax time is the busiest time of the year, and businesses often end up making mistakes that result in penalties from the taxation office. If you want to escape tax audits and penalties for filing inaccurate tax files, it’s better to be aware of the mistakes you need to avoid and minor details you need to focus on.
Lodging your taxes on time and with proper records of transactions is mandatory to keep the complexities away. Since the tax system in Australia is designed to be fair to everyone, it’s your responsibility to pay the correct tax amount every year.
Around 2 million tax payers are called each year by the ATO to review their tax returns, individuals/ business owners/ traders having a large fluctuation in their income are likely to be audited. To avoid the hassle of auditing, follow the below given tips:
- Lodge Your Tax Returns On Time
If you remain prepared all the time with your documents and transaction records in hand, you are less likely to face tax time delays and penalties. Also, doing all tax preparations before the last lodgement date means there are fewer chances of errors and mistakes.
- Review Your Calculations & Deductions
Before finalising your tax reports and files, make sure you cross-check the calculations twice or even thrice. Make sure every information you have added is correct and error-free to avoid tax audits. You can get in touch with a tax accountant to get your deductions reviewed for better tax returns.
- Declare Deductions You’re Entitled To
To get the best tax returns, make sure you declare the deductions you are entitled to for filing the right claim. Do remember that not all deductions are claim worthy. This means, you should be aware of legitimate deductions, what can be claimed and what cannot be claimed to avoid any tax audits.
- Keep Records Of Cash Transactions
Cash transactions can only be claimed if you have a receipt as proof and provide careful records. Digital records of a transaction that depicts the necessary details like date, vendor, cost and others are also approved as a claim.
So, these are some steps that you must consider to prepare accurate tax reports to avoid being audited by the ATO. If you are still concerned about filing taxes and avoiding audits or penalties, our team of tax accountants at KPG Taxation can assist you right away.