And it’s no longer just the big items that get noticed.
Wrong tax rates, overclaimed or missed deductions, omitted income, incorrect franking, no family trust election in place, or carried-forward losses that are missed. Each one changes what your client pays.
Every error found after the fact costs time: re-opening the job, re-checking the workpapers, amending and re-lodging. It delays finalisation for you and your client.
The ATO’s data-matching and risk models compare figures across returns, BAS, ASIC and third-party data. Even minor inconsistencies between labels and source documents can lift a client’s risk profile.
More clients are running their own AI tools over their financials and returns, and asking pointed questions about details that don’t line up.
Common year-end errors, what they cost the client, and the check that flags them before lodgment.
$15,000 of non-deductible expenses (client entertainment and ATO general interest charge) is claimed in the P&L and never added back in the tax reconciliation.
$3,750 of tax is underpaid at 25%. Once it’s picked up, shortfall interest and possible penalties follow, along with an amendment the client didn’t expect.
Scans the P&L for non-deductible items and checks each one was added back in the tax reconciliation and the return.
A $120,000 loan to the director sits in liabilities as a negative balance, so nobody spots it as a debit loan.
It can be treated as a $120,000 unfranked deemed dividend, assessable to the director at their marginal rate.
Finds related-party loans anywhere in the financials, including negative liabilities, and tests the Division 7A treatment.
A company that normally earns trading income sells its business, and this year its income is mostly interest and dividends. Its base rate entity passive income (BREPI) jumps above 80%, but the 25% rate is still applied.
It isn’t a base rate entity this year, so 30% applies. On $400,000 of taxable income, that’s $20,000 underpaid, and the maximum franking rate changes too.
Tests BREPI against the 80% threshold every year, using this year’s income mix rather than last year’s result.
A discretionary trust distributes $90,000 of franking credits, with $45,000 going to one beneficiary, but no family trust election was ever made.
Beneficiaries receiving more than $5,000 of franking credits can be denied them under the holding period rules, and the trust’s prior-year losses may not be available.
Checks the election status in the return and the trust deed, then tests franking credits and losses against the FTE requirements.
Last year’s return shows $85,000 of tax losses carried forward, but they’re never claimed in this year’s return.
The client pays tax on income that should have been offset, around $21,250 at 25%, until someone notices.
Agrees carried-forward losses between the prior-year return, the losses schedule and this year’s return.
The directors’ declaration is signed by a director who resigned from ASIC last year, and the current director’s surname is misspelt.
The financials don’t match ASIC’s records, so banks and lenders running KYC checks can reject them. That holds up finance and account changes until everything is corrected and re-signed.
Matches every signing director and name in the financials against the ASIC company statement, in both directions.
The company receives $70,000 of fully franked dividends from its share portfolio, but the $30,000 of attached franking credits is left out of the return.
The company misses a $30,000 tax offset. The credits also never reach its own franking account, so they can’t be passed on to shareholders.
Matches dividends received in the financials and dividend statements to the return, and checks the credits are grossed up, offset and added to the franking account.
A company earns its income from consulting, but PSI was never considered.
On review, the income can be attributed to the individual and deductions denied.
Flags PSI-style income and checks the return disclosures against the PSI workpaper.
Wages plus regular contractor payments push the client over the state payroll tax threshold, and nobody registers.
Several years of back-dated payroll tax, with interest and penalties.
Tests wages and contractor costs against the relevant state threshold.
Illustrative examples only.
Errors are caught before lodgment, not after the client or the ATO finds them.
Clients get work that holds up to their own scrutiny.
Every check, source and sign-off is kept on file for quality assurance and supervisory review.
