What does 2021 have in store for ATO audit activity?

2020 saw a lot of audit activity by the Australian Taxation Office and State Revenue Offices. Here are four of the most frequent claim types from the 2019/2020 financial year.

Much of the world has experienced some sort of shutdown this year, with governments implementing financial support strategies to keep their economies from slipping into a recession amid the COVID-19 pandemic. 

By Roman Kaczynski, Director, Accountancy Insurance

In 2020, we saw a lot of audit activity by the Australian Taxation Office (ATO) and State Revenue Offices. Our four most frequent claim types from the 2019/2020 financial year were:

  1. Employer obligations audits and reviews
  2. BAS audits and reviews
  3. Payroll tax investigations
  4. Income tax audits and reviews

Earlier this year, we published an article on these claim types and the factors contributing to their frequency. 

Throughout 2020, many Australian businesses have not kept up with their superannuation guarantee (SG) obligations, and this has drawn a lot of attention from the ATO. 

In October 2020, the ATO stated that it will start to ramp up audit activity, and we are already starting to see the effects of that statement in this area and in others. 

With Single Touch Payroll (STP), the ATO can easily flag over or under payments of JobKeeper. We have seen mismatches with JobKeeper payments, employee enrolments and STP as a big driver of ATO audit activity in 2020. 

We have also witnessed the effects of businesses being audited on their eligibility to receive the cash flow boost payment, and many have already had the ATO knocking at their doors.

What does 2021 hold in store? 

When the budget was released in October 2020, it covered new subsidies and tax incentives to help get the economy back on track. It also highlighted funding of A$15.1 million to target serious and organised crime in the tax and superannuation systems. 

This indicates that not only does the ATO plan to be more active in 2021, but it also aims to ramp up spending to crack down on specific areas.

In addition, in October 2020, the ATO commenced its “Next 5,000” streamlined assurance review program, which specifically targets private groups connected to individuals with wealth of more than A$50 million. We are already seeing ATO audit activity because of this program and expect this activity to increase in 2021.

Where else we expect to see more ATO audit activity in 2021: 

  • SG audits and reviews
    Very few employers will have used the SG amnesty and have fallen behind on their SG obligations because of COVID-19 business cash flow pressures.
  • STP audits and reviews
    Data capturing, which continues to become more detailed and sophisticated, feeding increased information to the ATO.
  • JobKeeper payment audits and reviews The ATO has historically been very active in reviewing government benefit schemes. With so many Australian employers enrolled in JobKeeper 2.0, it is nothing short of a certainty that ATO audit activity will increase in 2021.
  • Cash flow boost payment audits and reviews
  • The ATO will continue its checks to ensure that entitlements are reaching those employers that need it most. The ATO has noted that the program drew to a close with the lodgement of 30 September 2020 activity statements.

Although this year saw a temporary lull in the ATO and State Revenue Office’s usual activity level due to the COVID-19 pandemic, 2021 is already set to be as busy as ever when it comes to audits and reviews initiated by government revenue authorities.

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