As a business owner, you will undoubtedly have taken advantage of technological developments during the last decade or so. After all, the pace of change has been meteoric, and you now have access to tools, solutions, equipment and software programs that allow you to take full control of your operation. While you may now have a considerable advantage in your industry as you have been able to master these products and get ahead of your rivals, you need to focus even more attention on your accounting and tax affairs. Why is this?
In years gone by, accuracy may not have been one of your strong points when it came to those books. You may have done your best and had been reasonably sure of your reports, but you may have sent your tax return into the authorities without being completely confident. In turn, the tax authority may not have been as sophisticated as they are now, and some errors or inaccuracies may have slipped through.
However, the ATO has also been investing in new technology and have been taking advantage of sophistication in their own right. Consequently, they now have a range of different software products that enable them to analyse an individual's return with a very high degree of accuracy. In short, they can predict whether or not it is likely to contain any errors.
Algorithms at Work
Clever programmers have developed algorithms that enable the tax authority to compare the work of companies in a similar industry and predict whether their tax return is correct. This is done automatically and very quickly in the background by a machine, but if the algorithm suspects an anomaly, a red flag is sent to a human operative.
At this stage, your file will be pulled out and will be inspected very carefully to look for any inconsistencies. Remember, the ATO may also be able to cross-check your tax return with other records that you have sent into their office and to other government operations. One way or the other, they are likely to uncover any mistakes, errors or worse, and will then reach out to start a discussion.
Of course, you have nothing to worry about if your tax affairs are perfectly in order and you are sure that you did not miss anything. It can be difficult to keep up with the latest rules in this area, however, or to allocate enough time to this work, and in this case, it's a good idea to outsource.
Get in touch with a tax consultant and ask them to handle your affairs so that you don't fall foul of a pesky algorithm.