Dealing with the stress of an ATO audit or review

No one really associates taxes or going to see an accountant with some sort of emotional experience.

Maybe there is some emotion seeing the size of a tax bill and being upset by it, but it is nothing compared to the constant emotional drain that is the tax audit or review.

For starters, the auditors try to come across as friendly. There is the dangling of hope that the person we are dealing with might be really nice and we can just talk to them and it will be OK. Sometimes it is. Sometimes it is not.

Then there is the audit process. Auditors are not technical, but great at asking for information, and they ask for a lot of information. What will they do with all this information? Why are they asking for it? Are they auditing my entire life?

In truth, the auditor probably won’t even read most of the information you send through. Sometimes they are testing the quality of your information, or if you will resist providing it.

How do you cope with thinking that you are going through an extensive and comprehensive audit?

Then there are audit deadlines. Sometimes good intentions don’t work out well. Somewhere along the line the Government thought it would be good to ease the stress by saying that audits need to be completed quickly. That’s great in concept, but in reality it means the auditor will want to wrap up the audit with imperfect information. Will that mean they give you the benefit of the doubt? No way. They are auditing you for a reason, probably because their system picked up an irregularity, they will definitely be giving their system the benefit of the doubt.

So you get a big bill, or a promise of a big bill. Sometimes the bill is so ridiculously large it is beyond comprehension. What do you do?

Some people just go bankrupt. They might think its their only option.

That’s why I’ve always been very suspicious of the ATO’s figures around debts owned by small business. In my experience, most of these numbers would be overstated. I’ve seen debts that are ridiculously overstated, sometimes by factors of 1000% or even more. That’s right, 1000%.

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