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ATO Troubles Part II

October 05, 2017

We are helping another client who has got himself into strife with the ATO.

He controls a few companies that are involved with software development. This entitles him to rebates for some of the research and development, but there are a few problems:

(a) Another contractor’s paperwork was terrible. His original invoice was on the letterhead of a company of which he was a shareholder. The invoice did not have an ABN, so he got asked for a replacement about a year later. He then issued the invoice under the name of another company of which he was the shareholder, but it was only registered for GST that month. You could imagine how suspicious the ATO became at that point.
(b) Other contractors have not been paid. While that does not stop a claim being made for those invoices, an R&D company is not allowed to receive rebates for invoices issued by related companies unless they have been paid, and in 2013 and 2014 he made claims for invoices from a company that has the same owner as the company making the claim, despite not paying that associated company. The R&D company received a few hundred thousand dollars as a result. The stakes could be pretty high as this could possibly amount to a criminal offence.

Now the ATO has escalated the review to a full audit and is also reviewing another company thoroughly, with the likelihood of an audit on that company as well.

Our job is to coordinate the task of getting the paperwork and records together to support the invoices, make sure the ATO’s queries are all answered correctly, and explain the myriad of discrepancies as best we can.

If you know of someone with an ATO mess that needs sorting out, perhaps we can help on the legal side.


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