ATO's audit focus

The Australian Tax Office has warned that where it finds discrepancies that suggest under-reporting of transactions, it will ask the taxpayer to substantiate the relevant elements of their tax return and, if necessary, follow this up with desk and field reviews or audits. These can result in adjustments to tax liabilities, penalties and, in more severe cases, prosecution. The ATO’s booklet Compliance Program 2012-13 outlines the audit process.