Getting Audited- should i be worried?

It depends on how serious they are auditing. They may just want some questions audited. If they are looking at everything, then they can easily find out your role in a company. An ASIC search will quickly show your directorships and shareholdings. A copy of your credit report will also show directorships. They can get these, if they want to. If they do get your report, they will see all the loans applied for in the past 5 years. This could lead them to wonder….

Anyway, the will know about your trust from the tax returns lodged. You would probably be receiving distributions from the trust.

It would be very rare for them to go this far unless they have specific information. It is not for them to judge whether you would qualify for a loan or not.

ps, the company doesn't own the trust, but is the trustee, which means it owns the assets of the trust, on behalf of the beneficiaries.

Gene, if they're auditing you personally their scope is limited to your personal financial affairs. And they couldn't care less how you got finance – that's between you and the lender. As long as you're claiming legitimate deductions, they won't go beyond the very limited scope specified in the notification of audit. In fact, they usually aren't interested in the entirety of your personal affairs, either – they'll ask you to justify a particular category of deductions, eg self-education expenses, or property repairs, rather than the whole return.

There are very strong "firewalls" around your tax return. For example, if you claim "organised crime boss" as your occupation, and list fees paid to hitmen on your tax return, whilst they may question the legitimacy of the deduction, the ATO could NOT tell the police or any other government organisation of the activities listed on your tax return. I believe the logic is "crime happens anyway, and it's the police's job to catch criminals, not ours, and if people are going to be criminals, they may as well at least pay their taxes". And obviously no criminals would pay taxes if they risked getting caught by the police….

So whilst an audit is a bit uncomfortable, it's of a very defined scope and you shouldn't be concerned – at least at this stage -about any matters beyond the scope of their audit, which at most is your personal income and expenses. If they do decide they want to look at your Trusts, then they'd have to audit the Trust and provide all the requisite notifications etc – they can't just look at your personal audit and then say they want to see all the Trust stuff as well unless they go through the proper procedures to justify an audit of the Trust. And their auditing resources are limited, so they'd have to justify it within the Department.

The issue of your guarantor or "helper" should never come become an issue with the ATO.

Hope this puts your mind at rest.

Regards, Tracey in Brisbane