The ATO or Australian Taxation Office, is responsible for collecting funds from citizens and businesses. Their job is to administer the federal taxation system and superannuation legislation. While the ATO serves an important purpose, most people would rather not attract their attention. So what are you doing that might put you on the ATO’s radar?
Your Economic Performance Varies from the Average
One way the ATO will look for signs of improper behaviour is through averages. They will compare your business’ performance to that of similar businesses in your area. If your numbers seem way off, then this could be viewed as a red flag. Make sure you have proper documentation and proof of all incoming and outgoing expenses and profits in the event that your business stands out as an anomaly.
Work Related Expenses That Seem Unusually High
Work related expenses can help you save at tax time. Make sure you provide accurate amounts and have receipts to show how much was spent and what it was spent on. If you have unusually high work related expenses, this could trigger an investigation by the ATO. Just like overall performance, your expenses will be compared to those of other similar businesses. This sets a standard so the ATO can identify oddities.
Living Large Without the Income to Support It
Your finances determine how you live. The average person generally lives within their means based on their income. If they make more, then they can spend more. If you are spending high, but your income is low, this will catch the eye of the ATO. Living outside of your documented means could be an indication that funds are being paid and not reported.