If your financial affairs are a bit complicated, then you may need to bring in an accountant to help keep matters straight. After all, you'll want to ensure that you make no mistakes and can maximise your revenues, but you also want to ensure that you report your income properly. Remember, however, that your accountant can only do so much with the information that you provide and that you need to give accurate data upfront if you are to comply. While the repercussions may be obvious if you are not up front, why is the ATO even more prepared than ever to uncover your shortcomings?

When Looks Are Deceiving

When you lodge a tax return with the government, the document will detail your incomings and allowable expenditure to calculate how much you may owe. The return may match your books quite accurately and, on the face of it, appear to be above board, but looks can be deceiving.

Under the Table

Sometimes, people decide to hide certain income, or revenue they may make from a side job, in an attempt to reduce their obligation. They may receive cash "under the table" from a particular source and decide not to add it to their books at all.

Nowhere to Hide

However, the ATO has eyes everywhere. They are legally allowed to gather data from a variety of other sources and will use this information to cross-reference against your return. Don't be surprised if they access your bank accounts and may notice that you deposited a large cash sum. They may want to know where this came from, why it is not shown as revenue on your tax return and will expect a valid answer to the question.

Cross-referencing

They can also cross-reference information provided by your employer or customer, held within your superannuation records, or related to property that you may own. They may have a look at your superannuation record as well, to see if everything matches up.

Algorithms

Of course, most of this work is not done by a human being sitting behind a desk. It is fed through supercomputers, and sophisticated algorithms will pinpoint any anomaly. As and when that happens, a message will be sent to a human operator, who may then zero in on your case.

Best Approach

Make sure that you always lodge a tax return that is fully accurate and comprehensive. Provide all the information to your accountant and do not emit anything that could be pertinent. If you follow those guidelines, you should stay on the right side of the ATO and avoid any type of investigation.