SMSF auditors dealing with information requests from the ATO should provide documents in soft copy and explain what has been supplied to prevent relevant evidence being overlooked, an SMSF legal expert has recommended.
DBA Lawyers special counsel Bryce Figot noted the provision of soft-copy documents was highlighted in a recent Administrative Review Tribunal case in which an auditor completed all his work in hard-copy documents, but was unable to complete audit contravention reports after running out of the necessary forms, bringing him to the attention of the ATO.
“The auditor said he always does everything in hard copy, apparently on advice from his solicitor, but what is the advice of this solicitor?” Figot said during a recent webinar.
“If you’re an auditor I would say you have to do everything in soft copy because trying to do things in hard copy is very problematic.
“If you get audited [by the ATO] when you provide documents to the ATO, do it in soft copy and I recommend that when you submit documents, you keep a very express record of all documents on a very granular level.”
He added auditors should include a covering letter acknowledging the request for documents and what that request entailed, such as audit files for a particular client or year, as well as an appendix to the letter detailing all the documents provided.
The onus on ensuring the ATO had everything it requested and was able to find it among the information provided fell on the auditor, he said.
“Once you get into these big audits, a lot of the documentation process about who gave what when becomes about document management,” he said.
“The ATO are humans. They miss out on things. They make mistakes. So it’s really handy to have that list.
“Taxpayers are humans and they make mistakes too, and independent decision makers are more inclined to believe that a taxpayer made a mistake, rather than the ATO.
“So you have to be able to prove these things and in taxation the onus of evidence under the Taxation Administration Act, that burden of proof, is on the taxpayer.”
