Making Life Less Taxing
Shawcross Consulting
Audit Assistance and Advocacy
Tax audit assistance and advocacy
Have you got the right players on your team?
Our Experience
David Shawcross has over 10 years of tax audit experience in the ATO and more than 17 years of experience in Public Practice assisting clients with ATO and State Revenue Office audits. As an AFL umpire managing conflict was just part of the job.
ATO experience
- auditing individuals with investments
- auditing tax agents
- auditing businesses ranging from sole traders through to large corporations
- auditing a multinational corporate group involved in one of Australia's largest corporate frauds
- management of a special audit project targeting business with $5m to $50m turnover, including the selection of audit targets
- establishing the FBT audit plan for the WA region including the selection of audit targets
- involvement in establishing the National FBT audit program
Public Practice experience
- GST Audits focusing on the margin scheme and the financial acquisitions threshold test
- PAYG Withholding audits
- Superannuation Guarantee audits
- Employer obligation audits including FBT
- Payroll Tax audits
- grouping provisions and interstate wages
- contractors
- employee share schemes
- offshore workers
- FBT voluntary disclosures prior to audit
- Negotiation of settlements saving clients $100,00s and in one Superannuation case $5m
Preparation and Management is the Key
Having experience on both sides of an audit David understands how stressful and invasive this can be, even if you believe that you have done nothing wrong. There is usually a reason why you have been selected for an audit or review, however in many cases these reasons can be easily explained. The key to successfully dealing with any audit is preparation and management of the process. How well you prepare for the audit and how well you manage the process will have a significant impact on the overall outcome. Good preparation and management can greatly reduce the impact of the audit on your business and personal life and can assist in the mitigation of any potential penalties if errors are identified.
Having conducted numerous audits in the ATO for over a decade David has a comprehensive understanding of the processes involved and how to identify any potential issues. If there are any potential issues then you need to know what these are before the audit commences - you don't want the auditors to tell you something that you haven't already identified - there should be no surprises.
Management of the overall audit process is critical to achieving the best possible outcome and can certainly minimise the duration of the audit. David's ATO experience and knowledge has enabled him to successfully manage all of the audits that he has assisted his clients with. Some of the outcomes he has achieved has saved his clients significant amounts of time and money. More importantly he has been able to reduce the amount of stress and anxiety for his clients.
Over the past 34 years in the tax profession David has developed strong relationships with key senior officers both within the ATO and the State Revenue Office. David has always been able to identify the right person to engage with in order to resolve any issues.
If you are selected for an audit then before you do anything you should engage the right team to help you through the process and Shawcross Consulting is that team. Speak with us before you respond to any audit or review notification otherwise it could end up costing you a lot of time and money.
Behaviours and characteristics that may attract the ATO's attention
The table below summarises some of the key behaviours and characteristics that the ATO considers when selecting audit targets.
- tax or economic performance is not comparable to similar businesses
- low transparency of your tax affairs
- large, one-off or unusual transactions, including transfer or shifting of wealth
- a history of aggressive tax planning
- tax outcomes inconsistent with the intent of tax law
- choosing not to comply or regularly taking controversial interpretations of the law
- lifestyle not supported by after-tax income
- treating private assets as business assets
- accessing business assets for tax-free private use
- poor governance and risk-management systems.
ATO's typical audit approach
Notification of audit
The audit notification will usually be made by phone to arrange a suitable time for the initial meeting.
This will be followed up by written confirmation including a meeting agenda outlining key issues for discussion and a draft audit management plan.
Initial meeting
The meeting should be transparent about:
- the audit scope, the periods under audit and the expected completion date
- the ATO's risk hypothesis and information required to assess this hypothesis
- your choice of channel for providing information
- how the ATO will conduct the audit, including key milestones and relevant guidelines
- the advantages of, and procedures for, making voluntary disclosures
- our the ATO's expectations of you when they request information or records
- the circumstances in which you can expect the ATO to use their formal access powers.
These discussions will be formalised in an updated audit management plan, which will be provided after the meeting. The audit management plan will contain contact details of an executive level officer that you can contact if your assigned officer or the audit team does not meet your expectations or you have any other concern.
Information gathering and record keeping
Formal powers of access to information and documents
The ATO's formal powers fall into the two broad categories:
- Notice powers require you to give information, attend and give evidence or produce documents.
- General Access powers give the ATO full and free access to places, books and documents. They also require reasonable assistance be given to their officers in exercising these powers. They will generally arrange the exercise of these powers with you in advance except in exceptional circumstances, such as where there is a reasonable suspicion of risk of destruction of documents or more serious breaches of the law.
- The ATO may use their formal powers of access in certain higher-risk situations, including:
- where they are requesting information about third parties (including related parties)
- cases involving potential tax avoidance
- where you have a history of not voluntarily providing the required information
- where you request that the ATO use their formal powers.
Determining and communicating their position in writing
During the latter stages of an audit it is the ATO's usual practice to provide you with a position paper that clearly explains their position and gives you an opportunity to comment before they finalise the audit.
A position paper sets out:
- the available facts (which they will endeavour to agree with you first)
- the ATO's application of the relevant law to the facts
- details of any proposed assessments arising from the audit
- details of who to contact to discuss the matter.
In determining their position the ATO will research the law, taking note of any pre-existing ATO views. They will give full consideration to your position and supporting arguments. Where they disagree with you, they will explain why. They will also provide opportunities to explore alternative dispute resolution as a cost-effective means of avoiding potential legal disputes.
The ATO will give you an opportunity to comment and they will consider your comments before making their final decision, including request for an independent review. You can also make a submission for reduction or remission of penalties or interest charges.
Finalising the audit
If the ATO intends to amend your assessment they will usually advise you beforehand. They will advise you of the audit’s outcome in writing and offer a final interview to discuss any penalties and interest charges.
The ATO will also send you audit-finalisation correspondence within seven days of reaching their final decision.