How to prepare for a business tax audit

Decoding the ATO's focus 

The ATO tailors its audits based on current trends and areas of concern. For example, in the wake of the JobKeeper program, they might have prioritised scrutinising its disbursement in 2020/21. This year, expect them to potentially zero in on employer obligations like Superannuation Guarantee (SG) contributions, thanks to Single Touch Payroll (STP) data.  

Additionally, cryptocurrency and share transactions are likely on their radar. Staying informed about these trends allows you to pre-emptively address potential tax audit triggers. 

Record-Keeping is Your Audit Shield 

Imagine this: the ATO comes knocking, and you present them with a meticulously organised set of digital records linked to transactions, all in one place. This dream scenario becomes a reality with an efficient expense management solution and a receipt app like Thriday. These systems simplify day-to-day financial management and ensure your records comply with the latest tax regulations.   

It's as simple as saving all your receipts in one place, linking them to the relevant transaction and correctly categorising and applying chart of accounts to those same transactions. 

The best part is that Thriday automates all of this; all you need to do is snap, send and save the receipt to Thriday. That's it. 

Don't Become a Pack Rat (But Keep Those Receipts!) 

While audits typically focus on the most recent tax return, the ATO can go back further if they suspect discrepancies. Retaining business financial documentation for at least five years is crucial. However, ditch the overflowing filing cabinets! Tax receipt apps like Thriday allow you to ditch paper and keep digital copies of receipts for effortless retrieval. Thriday's easy-to-use app lets you scan receipts on the go to catch all of them. 

Mistakes Happen, So Fix Them Fast 

Let's face it, mistakes happen, especially with manual calculations. These can lead to errors in your tax return and potential headaches during an audit. Thriday minimises this risk with its real-time tax calculation feature.  

Thriday automatically calculates the tax implications in the background as you receive income and incur expenses. This reduces the chance of errors due to manual data entry and ensures your books are always up to date.  

But don't panic if you discover an error due to cash payments or other issues. You can manually correct them in Thriday and promptly inform the ATO to demonstrate transparency and proactiveness, potentially mitigating penalties. 

Remember, a proactive approach is your best defence. You can transform a potential storm into a gentle breeze by keeping your finances organised, understanding the ATO's focus, and being prepared to address any issues promptly. So, breathe easy, entrepreneur, and conquer that ATO audit! 

Takeaway 

• Ensure all of your income and expenses are accounted for, including cash 
• Make sure you're saving all of your receipts 
• Account for business and personal use on combined expenses 
• Link receipts to the relevant transactions 
• Keep everything in one place   

The best part is that Thriday makes this more accessible and easier than ever and automates most of it for you.