When faced with a full audit it is essential to seek professional advice.
An authorised Australian Taxation Officer (ATO) officer has full and free access to all buildings, places, books, documents for any of the purposes of the Taxation Administration Act 1996, and for that purpose to make extracts from or copies of any such books, documents or papers.
The following matters should be considered if you receive a request for access:
- The access must be “for the purposes of the Act” and the ATO officer must have proper authority.
- The auditor is not given the right to ask questions or remove records as this section does not contain the word ‘audit’ or ‘investigation’.
- The ATO officer will normally provide an identification card and this should be checked to ensure it contains the necessary authorisation.
- You may ask for a clear statement of purpose to establish that the request for access meets the requirement in section 263 that access is for the purposes of the Act. If this is not provided then correspond with the ATO, requesting a written statement, promising full co-operation upon receipt of a satisfactory reply.
- Remember that the ATO has no right to use force, but that you are obliged to provide the auditor with reasonable facilities and assistance. This would include a desk, a chair and a power point for a photocopier. The photocopier may be necessary because the ATO may not seize documents. The auditor does not have authority to borrow or take away any of your documents or records.
- A taxpayer should take appropriate professional advice as to whether the auditor’s questions should be answered. Perceived exposures should be balanced with the fact that penalties may be reduced if an early disclosure is made in an audit.
- It should be noted that a taxpayer is not under any obligation to answer questions and that it may be appropriate to request that written questions be submitted.
- On occasion, the auditor suggests that a tape recording of the conversation be kept. Again, seek professional advice.
- You should keep file notes of all discussions.
With our experience in public companies who have been targeted by the ATO, the advice is all the same – don’t block the ATO, but follow them and document everything they do.
The issue of a photocopier is a grey area – you can demand that they bring in their own or ask them to pay for copies. Judges might prefer you at least let them use your copier.
Additionally, they can’t just barge into your premises. You can request they leave and come back later as you might have appointment. However, you must be reasonable on this point – later that day or next morning if they come in late. You could also take pictures of them and their vehicle for your records.
For more information, speak to one of our TaxAssist Accountants today.
By Terry Murphy
Last updated June 2017