How to Handle SRO and ATO Audits Stress-Free (2025)

What is an SRO or ATO Audit?

SRO and ATO audits are routine tax compliance checks. During these audits, your business financial records are reviewed to ensure correct tax payments.

These audits can focus on different taxes, including income tax, Goods and Services Tax (GST), and state-based payroll tax.

The process starts with a notice, followed by a meeting where the audit scope is discussed. Understanding your obligations and responsibilities is crucial.

What Triggers an SRO or ATO Audit?

Being selected for an audit doesn’t necessarily mean wrongdoing. Several factors can trigger an audit:

• Random Selection: Some businesses are chosen randomly as part of compliance efforts.
• Red Flags: Unusual patterns in tax returns may trigger an audit, including:
  • Inconsistent financial document entries.
  • Consistently low or loss tax returns.
  • Tax statements that contradict public information.
  • Undisclosed transactions with foreign entities.
• Past Mistakes: Businesses with prior tax issues or late filings are more likely to be audited.
• Industry Benchmarks: The ATO compares your business performance with industry peers. Discrepancies may trigger an audit.
• Inconsistencies with Third-Party Data: The ATO cross-checks tax information with bank and other financial data for discrepancies.

ATO Audit Period

The audit period generally goes back up to four years, but in cases of fraud or evasion, it can be indefinite.

What to Do During an ATO or SRO Audit

Stay proactive and follow these steps:

• Get Organised: Gather financial records, invoices, and receipts. Ensure electronic records are updated.
• Read the Audit Notice: Understand the scope of the audit and prepare relevant documents accordingly.
• Assign a Point of Contact: Designate an accountant to manage communications with the tax office.

Communicating with the ATO or SRO

Effective communication is crucial. Follow these best practices:

• Be Transparent: Provide accurate information and submit documents on time.
• Stay Calm: Audits are routine and don’t always imply wrongdoing.
• Seek Professional Assistance: Work with a tax professional to avoid missteps.

Staying Operational During an Audit

An ATO audit shouldn’t disrupt your business operations. Follow these strategies:

• Delegate the Process: Engage a tax adviser to manage the audit while you focus on business.
• Stay Prepared: Maintain accurate financial records to simplify future audits.

What Happens After the ATO Audit?

The audit outcome can be one of three possibilities:

• No Changes: Your tax affairs are in order.
• Adjustments: Errors may require tax return modifications.
• Penalties: Significant errors or non-compliance may result in penalties, though appeals are possible.

The ATO offers Alternative Dispute Resolution (ADR) for disputes without court proceedings.

How Business Adviser Can Help

At Business Adviser, a division of DAB Financial, we specialise in managing ATO and SRO audits. Our team offers:

• Guidance: Helping businesses understand and comply with audit requirements.
• Documentation Support: Assisting with gathering and organising required financial records.
• Compliance Strategies: Ensuring businesses are always audit-ready.

Contact Business Adviser today to navigate your next SRO or ATO audit stress-free.