Taxation Risk Management

Are you at risk?

What areas of your business expose you to potential risk?

The vast majority of business people will detail risk areas including products, staff and OH & S. They will, however, rarely identify taxation management as a risk area.

Each year, the ATO releases its compliance program which outlines their major focus areas of audit and review to assist taxpayers in managing their risk exposure. It should however be part of the business’ operational management that issues around tax risk are mitigated as much as possible.  This process will assess the business’ exposure to those matters identified by the ATO each year and ensure that processes and procedures are established by the business and its advisers to protect the business should they be subject to an ATO rview or audit.

The process need to not be overly cumbersome, but will, by necessity, reflect the style, size and complexity of the business.  It is very imortant that any risk management strategy will also deal with “unusual” transactions that are undertaken by the business including asset purchases and sales and (especially) remuneration of senior employees and proprietors.

One of the benefits of implementing a tax risk plan is that it will enable the acquisition of information on a timely basis as transactions occur.  This will help protect the business should staff leave or die between the occurrence of the transaction and a subsequent review/audit.  The “we don’t know or can’t remember” argument is not one that holds weight when arguing with the Tax Office.

So, your risk management in your business needs to be cognisant of your tax position and records as this is an area which most businesses fail to consider.

Are you at tax risk?

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