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Things the ATO Pays Attention to during Tax Season

Tax season is nearing, so you should start lodging all your tax returns from the end of July. This way, you won't have to deal with the Australian Taxation Office (ATO) at the last minute, which may lead to penalties. The ATO is always looking for red flags that may indicate you have not paid your taxes.

Tax accountants ensure that their clients have their taxes in order. They know how stressful it is to receive a notice from the ATO about unpaid taxes. Hence, they always advise their clients to be upfront about their tax obligations and ensure they have paid all their taxes.

Moreover, tax accountants know the ATO may take advantage of taxpayers unaware of their rights. Thus, they will ensure that their clients are up to date with their tax affairs.

The ATO pays attention to the following things during tax season:

Payment of Taxes

This is the most important thing the ATO pays attention to during tax season because they want you to pay your taxes on time. The ATO may charge you interest and penalties if you have unpaid taxes. This can negatively influence your cash flow and business finances. Worse, the ATO may also take enforcement action against you, including garnishing your wages or seizing your assets.

If you're having trouble settling your taxes, the ATO has several options available to help you. These include payment plans and hardship programs. You can find more information on their website or by speaking to a tax agent.

Record-Keeping and Purchasing Documents

Although these documents are no-brainer requirements, they still need emphasis because they’re mandatory. The ATO requires businesses to keep records of all purchases and expenses. Similarly, they want you to have all the documents of your income and other financial transactions.

You can either keep your records electronically or in paper form. However, it is advisable to keep both. It will help you if you lose one of the copies.

Capital Gains

“Capital gains” refer to increases in the value of your assets and profits you make when you sell your investments. You may have to handle Capital Gains Tax if you sell an asset and make a profit. The value of tax you pay depends on the profit you make and your tax rate.

Some benefits are exempt from Capital Gains Tax. These include your primary residence and your car. If you lose when you sell an investment, you may use it to reduce your tax bill. Tax accountants always advise their clients to keep outstanding records regarding their assets. This will make it much easier to calculate any Capital Gains Tax that may be payable.

The ATO has several measures in place to monitor capital gains. These include data matching with third-party sources, such as banks and real estate agents, and reviewing individual tax returns. If the ATO believes you have made a capital gain that you have not declared, you may be accountable for penalties and interest charges.

Final Thoughts

It's important to be aware of the things the ATO pays attention to during tax season. This includes ensuring that your tax return is lodged on time, that you have paid all of your taxes, and that you have kept accurate records. If you are unsure about anything, it's always best to speak to a professional tax accountant.

The ECommerce Accountant is a company you can rely on for your taxation needs. Our team of tax accountants in Australia can provide you with sound advice regarding tax payments and other related matters. Get in touch with us today for more information!

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