The ATO is using AI: is your tax reporting ready?
The Australian Taxation Office (ATO) is using artificial intelligence (AI), data analytics and automated risk models to support its compliance activities.
The ATO’s AI transparency statement explains that AI helps staff process large volumes of complex data and identify potential risks, including suspected non-compliance and fraud, for human review.
For taxpayers, this means unusual transactions, discrepancies and other risk indicators may be easier to identify. The ATO states that decisions which adversely affect taxpayers will be made by a human, and taxpayers retain their rights of review.
The message is clear: accurate reporting, good record keeping and consistency across your tax and financial information matter.
What Holmans Is Seeing
At Holmans, we expect increasingly sophisticated data analysis to contribute to more ATO reviews and audits over time. Our view is that the ability to analyse and cross-reference information more efficiently will make it easier for the ATO to identify matters for further investigation.
In matters we have seen, the level of detail identified has been striking—even isolated, one-off errors and mistakes can attract attention. An error does not necessarily mean deliberate wrongdoing, but explaining it and responding to questions can still take considerable time and effort.
What Should Taxpayers Do?
Being prepared starts well before an ATO enquiry. Practical steps include:
- Keep supporting records for deductions, transactions and tax positions.
- Check that your information is consistent across tax returns, business activity statements and financial records.
- Investigate discrepancies early, rather than leaving unexplained differences unresolved.
- Seek advice before lodgment if you are unsure about the treatment of a transaction or a claim.
Good records also help your accountant understand what happened and respond clearly if questions arise.
Speak With Holmans Before You Lodge
If you are uncertain about a transaction, deduction or tax position, speak with Holmans Accountants before lodgment. Addressing potential issues early gives you the opportunity to review the facts, gather supporting documents and make informed decisions.
If you have already received an ATO enquiry, contact our team promptly so we can help you understand the request and prepare your response.
Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.
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Phone: (07) 5430 7600 or email info@holmans.com.au
