Good records the best defence when the Tax Man knocks

Tamara MacNellie • April 22, 2021

As the Australian Taxation Office (ATO) turns its attention to businesses and individuals who have used COVID-related support programs, many taxpayers are likely to find themselves on the tax man’s radar.

There are a number of red flags that can spark the ATO’s interest in your business or personal tax affairs. At present though, having applied for  early release of your super, or receiving government support through  JobKeeper, definitely puts you at a higher chance of an audit.

The ATO has identified a number of concerning and fraudulent behaviours with both these programs and is auditing taxpayer applications, so it’s worth understanding the regulator’s powers and the importance of good records when it comes to your tax.

ATO’s authority to audit

When it comes to the tax audit process, the ATO has significant powers. It has the authority to gather information about you and your personal circumstances from a range of sources, including other government agencies such as Services Australia. The ATO can also seek information about your business from financial institutions including your bank and insurers.

Generally, the ATO’s preferred strategy is to request information from you using a cooperative approach. If you fail to respond appropriately, however, the tax office may decide to use its statutory or ‘coercive powers’. This involves issuing legal notices seeking information from you and your advisers.

It’s sensible to act cooperatively with the ATO from the outset, rather than force the regulator into coercing you into compliance.

If you do receive an ATO request for information, we can help prepare the necessary documents and your initial responses. We can also be a useful guide through the process if you receive notification of an upcoming audit.

Why good records matter

As a taxpayer, if you want to object to a tax assessment or question an audit decision made by the ATO, you need to prove the decision was incorrect or excessive.

In the event of an Administrative Appeals Tribunal review or Federal Court appeal about your tax assessment or audit, the statutory burden of proof rests with you. This means you must prove the assessment is excessive or otherwise incorrect.

There is a legal presumption the ATO’s assessment is correct, unless you can produce evidence to prove what the assessment should have been. That’s why it’s essential to keep good records to substantiate your overall tax affairs and any deductions you claim in your annual return.

Tips for good record keeping

The golden rule of good recordkeeping is that you must keep records that are relevant to your tax and super affairs for  five years.

For  businesses, your records must be safely stored in a way that protects them from being changed or damaged, and you must be able to show them to the ATO if requested. The records must be kept in English or be easily converted into English.

Your business records need to include the quarterly Super Guarantee (SG) contributions paid to your employees and how they were calculated, wages records (including directors’ fees), a list of creditors and debtors, stocktake records, tax invoices for purchases over $82.50, and your BPAY or PayPal records.

Common record-keeping errors

According to the ATO, common business recordkeeping errors are failing to keep accurate records of all your cash and electronic transactions, and not regularly reconciling sales into your business accounting software.

Many businesses and individuals also fail to accurately split the private and business portions of an expense and don’t ensure they have sufficient records to substantiate their claims for tax deductions.

The ATO can seek information or documents at any time – either before starting a compliance activity or during a review or audit – so it’s best to be prepared. An easy first step to assessing if your business records are up to scratch could be checking out the ATO’s online  Recordkeeping Evaluation Tool.

If you would like help with an information request or audit notification from the ATO, call our office today.

Do you know how your super is performing?

By Nikki Ashurst • November 2, 2026
Many Australians don't know how their super fund has performed or what it invests in. Are you one of them? Here's what to check and why it matters. Do you know how your super fund performed over the last two years? Many Australians don’t and are working towards their financial future without fully understanding one of their most important assets and without a clear plan for how their super may support them in retirement. That's not surprising, as many people view super as something that should run quietly in the background while they're busy with careers, families and everything else that life throws at them. But when you’re not sure what’s happening behind your balance, it’s harder to know whether you’re on track, whether your current approach reflects your goals or what opportunities might be available to help you make the most of what you’ve built so far. Your super isn't sitting in an account, it's invested Super is invested by a fund on your behalf across a mix of assets, with those investments working to grow your balance over time. Those include: Shares Ownership in Australian and international publicly listed companies. Their value can rise and fall, sometimes substantially over short periods but shares can provide capital growth over the long term. Property and infrastructure Real assets like office buildings, shopping centres, airports and energy networks. They can produce income and don't always behave in the same way as share markets, helping diversify investment holdings. Fixed interest and bonds Lending to governments and companies in return for interest. They can provide regular income and be steadier than shares, although returns and risk vary depending on the investment. Cash Generally, the most stable and lowest risk investment type. It can provide stability and faster access to money but typically offers lower longer term return potential. The investment option you choose determines the mix of assets held in your super based on your risk appetite. Most super funds offer options from conservative to high growth. If you’re young, a growth option with a higher exposure to growth assets like shares could offer higher returns over time – but it also comes with higher risk. As retirement nears, you might want to consider a more conservative approach with more defensive assets, like bonds for example to protect your savings. If you've never made a choice, you're probably in your fund's default option, which is designed to suit a broad membership. It’s worth knowing whether the mix you're in matches your circumstances and goals, including how far you are from retirement. Why performance alone is not a true comparison If you're thinking about how your super compares, returns are often where people start. The trouble is that a return figure means nothing without context: What it's being compared to Growth and conservative options invest differently and with different levels of risk. Compare like with like or the comparison may not be genuine. The comparison period A single year can be heavily influenced by short term market conditions. Super is measured in decades, so five, seven and ten year returns tell you far more about whether a fund is consistently doing its job, albeit not a predictor of future performance. Fees and tax Published returns should reflect investment fees, costs and tax but administration fees may be charged separately from your balance. Two funds quoting the same return can leave you in meaningfully different places once all fees are accounted for. Then there are the things that returns can't show you at all. For example, what insurance is attached to your account and what it's costing you, whether the fund offers guidance, tools and advice or simply sends a statement once a year. Another consideration maybe the level of support available when you need it. When comparing funds, it's worth looking at the full picture, including performance, fees, investment options, retirement support and member benefits. What today’s decisions mean tomorrow To understand how your super stacks up, start here: Find your investment option It's on your annual statement and in your online account. Look at what's in it Your fund publishes the asset allocation (shares, cash etc.) for each investment option. Check the long-term return for that option Focus on five and ten year returns, not just last year and compare them with equivalent options. Understand the total cost Add together administration fees, investment fees and insurance premiums as an annual dollar figure. Comparing super is about working out which option will perform best for you. Before you jump in, it’s worth understanding what's behind the numbers so you can make decisions based on more than a headline return. Knowing where you stand is the first step A super balance tells you where you are today. Understanding how your super is invested, how it compares and whether it's aligned with your goals helps show whether you're heading in the right direction. Source: MLC The information in this article does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this document. Subject to law, Capstone Financial Planning nor their directors, employees or authorised representatives gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this document. Principal Wealth Management Pty Ltd trading as BMO Financial Solutions ABN 53 109 336 601 is a Corporate Authorised Representative (CAR 277821) of Capstone Financial Planning Pty Ltd ABN 24 093 733 969 Australian Financial Services Licence (AFSL) No. 223135.

The SMSF landscape is changing

By Jude Schofield • October 7, 2026
More Australians are choosing to take direct control of their retirement savings by establishing a self-managed super fund (SMSF) and according to the SMSF Association, Aussies now see their super as an important part of building and managing their overall wealth.