GST audits are already taking place but the pace of these audits will pick up substantially after July 1 once the Australian Taxation Office (ATO) receives its new budget allocation, PricewaterhouseCoopers (PwC) indirect tax partner Kevin O'Rourke warns.
He says that expectations are high that the ATO will be given significant resources for senior GST auditors to carry out bigger and better audits of the new taxation system.
"While the Taxation Office has different programs depending on the size of the organisation it audits, large corporates which turn over more than $20 million each year can anticipate special attention," he says.
"But whatever the size of the business, our message is the same - be prepared. Alongside these two words, there are two more that must become part of the GST Audit vocabulary - process mapping."
O'Rourke says the firm's experience to date is that ATO auditors will contact a business to arrange a meeting without trumpeting the fact that they are coming to do a GST audit.
Instead, he says, they prefer to call it a "co-operative compliance visit".
"But as soon as they arrive, their first question will be: do you have process maps for your business? The ATO auditors will then inform you that they intend to spend the first phase of the audit process mapping your business. This gives a very clear indication of where the ATO is coming from.
"Rather than just coming in to check that your monthly or quarterly BAS has been correctly completed, the Taxation Office's main aim is to gain a comprehensive understanding of your business.
"It will examine all business processes in order to understand the transactions in relation to those processes. It will check the quality and integrity of the data and the quality and integrity of the systems.
"The auditors will look closely, for example, at the number of manual interventions in the process.
"Also, rebates will be closely looked at, because in some parts of the retail sector rebates are a substantial proportion of the business," he says.
To read the full story, including advice on how map your GST processes and how to prepare documentation for claiming your special GST credit, see this week's QBR e-newspaper, available only to subscribers of Queensland Business Review magazine. Subscribe before July 1 and for just $99 a year you will receive the 2002 Book of Lists, our award-winning weekly e-newspaper, and our monthly printed magazine. Call 1800 649 578 or email subs@pubserv.com.au for details.