Just a short follow-up to our Tax Audits blog on 27 ^th March, we don't want to spoil your long weekend.

We have just had two tax auditors here in the office, doing a GST audit.  They selected one quarter, and set out to verify it was 100% correct:

Income

Trace Z reads on till tapes and/or invoices to Sales, and then to bank statements and to the BAS.  Has all income been taken up?  If any GST free, why?

Expenses

Invoice to payment to bank statement to BAS.  Ensure GST claimed is correctly claimed (copy of GST Detail Report required).

Records

What accounting system is used?  How are the base records filed?  Has care been taken in input of records and preparation of the BAS?  Has the bank account been reconciled every month?

Benchmarks

How do the annual or even quarterly financials compare to benchmarks?  Explain and prove the differences (looking for undeclared income).

Superannuation

Calculate the amount required to pay.  Paid by the due date?

Check Wages

Tax File Number Declarations.  Choice of Super Declaration.  Tax Withheld correctly calculated and remitted regularly.

If the Auditors are not happy with that quarter, they do the whole year and if necessary will go back a further 4 years.

And then, "seeing that we're here, let's have a look at Fringe Benefits too".  They especially require:

- Car log books (and service records and invoice for purchase of the vehicle)

- Any entertainment or hospitality claimed in the last 12 months

- Goods purchased by employees at lower rates than those charged to the public

The Penalties can be anywhere between 20% and 100%.

The simple messages are 1) there are no allowances for simple mistakes, and 2) failure to support claims made will be assessed as 'serious'.

And, to end on a happier note - happy Easter break!