Tax audits are conducted when the ATO deems that a more extensive examination of an issue is necessary. These audits can be conducted on a fairly basic level or they can be much more in-depth and analytical.
In most cases, there will be a review which then leads to an audit, but this isn’t always necessary. A review may not be deemed necessary in cases where fraud or evasion is suspected or there is a high risk associated with the transaction.
The ATO states that they will be transparent about the following aspects of an Audit:
Cooperating with the ATO’s requests is the ideal response. If there is a lack of cooperation, then the ATO can use their formal powers to access the information they are seeking:
Cooperation makes this process much easier for both parties as a lack of cooperation can not only create a bad image but can be easily overcome by the ATO’s powers.