• New Wave Accountants

3 Common Business Mistakes Committed During Tax Audits

Running a business is a constant problem and solving game, but while some errors can lead to improvements, other mistakes are best avoided for good. Some of the consequences that can hurt your company include tax errors, and with tax season looming around the corner, the risk of triggering the ATO is ever-present too.


Rushing to meet the deadline is stressful enough, but letting some mistakes slip past your radar can lead to further trouble on the horizon, and it often comes in the form of tax audits. This puts your financial records under full scrutiny, but the ATO can pick up worse issues that can dig your hole deeper.


Many of these errors have no ill-intentions, but there will be repercussions nonetheless. To avoid getting on the wrong side of the ATO, be sure to avoid these common mistakes businesses often make:


1. Claiming Donations Without Proper Receipts


It’s good practice to keep receipts, no matter how low the amount may seem, even when it comes to donations. Amounts that go beyond $2 need a receipt for every donation, though keep in mind that businesses can’t claim it if the donations involve personal benefits. Additionally, you also can’t make deductibles on donations unless the organisation provides a deductible gift recipient (DGR) that the ATO endorses.


2. Claiming Business Travel Expenses


Business travel is often tax-deductible, but it’s easy to mistake which costs are spent on personal transportation or work-related expenses. But the ATO only recognises travel fees such as business meals, accommodation, car hire, airfare, or taxi fare. However, professionals who claim business travel expenses for sightseeing activities in business trips can be penalised since these are not deductible expenses.


3. Claiming Everything as Business-Related When Paying for Home Bills


Many remote employees or work-from-home entrepreneurs benefit from claiming a percentage of their energy usage as tax-deductible. After all, home-bound professionals use their abode as their primary workplace, but that doesn’t mean all your phone and electricity bills are 100 per cent work-related.

When claiming for deductibles, be sure to calculate the percentage you use specifically for business purposes so you can claim for the right amount.


The Bottom Line: Avoiding Tax Filing Errors to Mitigate Troubles with the ATO


Tax audits don’t necessarily mean your business is in trouble. A simple mistake can catch the ATO’s attention, but it can be a problematic experience if they find flaws during their audits. Some of the common tax errors tax auditors pick up were mentioned above, but hiring an accountant to help guide you through your finances should help avoid making these mistakes in the first place.


Why Choose New Wave Accounting to Help You?


We are small business accountants in the Gold Coast that provide end-to-end accounting and bookkeeping services to help scale and grow our client's businesses. Having worked with over 600 businesses, we understand how small businesses tick, giving you better money solutions that will help you flourish. Reach out to us today!


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