Articles.

What to Expect from ATO Audits and Risk Review

Is your company compliance ready? What if you’re ever selected for a review or audit of your claim?

ATO audits can occur at any time and in the first instance, the ATO will conduct a risk review, to determine if there are compliance issues that warrant the full audit process. Often the risk review process allows issues to be resolved quickly and simply without the need for a full audit. 

If an audit is instigated, there are several stages involved. Do you know what to expect? 

Ask yourself:

  1. Would you meet your regulatory obligations for your R&D Tax Incentive claim? 
  2. Are your records being maintained and updated regularly? 
  3. Do your records exist in a single place? or,
  4. Would you have to frantically pull staff from their current work to find, collate and prepare a response to AusIndustry reviewing the claim you’ve just submitted, for an exorbitant amount of money and resources?

Let’s explore.

In the first instance, an initial meeting will take place. This will involve research, and investigation by an ATO case officer and discussions with the business owner, before the ATO issues a final audit report and outcomes. 

Often the ATO will issue an interim report, allowing the business owner to review their position and make comments or provide further information. The audit process can last from 3 to 18 months.

What to Expect

  • If your business is linked with a registered tax or BAS agent, the ATO will generally liaise with them first. The business will be assigned an ATO case officer.
  • The process will involve an initial interview, at which they will explain why the business was selected for an audit. The ATO representative should give an indication of the period to be audited, the business owner’s obligations, what to expect from the ATO during the process and an opportunity for voluntary disclosure. They will also provide the means for raising concerns during the audit or for disputing the result of the audit.
  • The ATO will investigate business records such as bank statements, contracts, agreements, payroll, finance arrangements, records of asset purchases and disposals, and other supporting evidence. Having access to complete business records will assist in the conduction of the audit.

It all sounds daunting, don’t get us wrong. It’s a good thing that AusIndustry is keeping you accountable but an audit can certainly rain on your parade of free government kickbacks. So wouldn’t you prefer to be prepared?

Staying compliant is key to maximising your R&D Tax claim and minimising impact of an audit or review

To be compliant means that you’ve got a system or processes in place to capture and record your company’s R&D activities and any expenditure related to those activities, as and when they occur.

Most companies use and keep a series of spreadsheets, timesheets and project management tools and would think they’ve got it covered. However, many of those systems aren’t what AusIndustry would consider best practice and certainly won’t assist you to prove your scientific method of the workflow.

Other companies keep nothing… not a thing! And still claim, which is leaving them at an extremely high risk of non-compliance.

Smart companies contact Clearpoint Ventures (CPV); a dedicated R&D Tax consulting company that offers all-year-round, R&D Tax expert advice, support and management. 

Clearpoint Ventures has a compliance-ready framework that allows you to keep track of your R&D activities and records. This is blended with regular consultation with CPV’s Managing Director, Dr. Pavel Reddy, who will assist to review your R&D activities, expenditure, eligibility and record-keeping strategy.