
Reconciling Plumbing Business Records with Your Notice of Assessment
Reconciling plumbing business records with your Notice of Assessment is one of the most important steps you can take to stay on top of your tax obligations and make sure you only pay what you really owe for the year. Many plumbing business owners discover too late that their records don’t match what the Australian Taxation Office (ATO) expects, leading to unexpected tax bills, missed opportunities for a tax refund, or even the need to pay additional tax. By understanding what the Notice of Assessment is, how it works, and how to check it against your own records, you can avoid these headaches and keep your business on track.
What is a Notice of Assessment?
A Notice of Assessment is the official statement from the Australian Taxation Office that shows how much income tax you need to pay, or whether you are entitled to a refund, for the financial year. When you lodge your tax return—either yourself through ATO online services, or with the help of a registered tax agent—the ATO reviews your information and calculates your tax assessment. They then send you the Notice of Assessment, which details your taxable income, the tax payable, any credits for tax already paid, and whether you will receive a refund cheque or have a tax debt to pay.
Your Notice of Assessment also sets your payment deadlines. If you owe money, it will tell you about the due date by which you need to pay. If you are getting a refund, it will confirm this and, in some cases, the bank details your refund will be paid into. You’ll see all the details, including your tax file number, the relevant financial year, and a summary of your total income and any deductions you claimed. It’s important to review your assessment carefully, as mistakes can be costly.
If you have a myGov account linked to the ATO, you’ll get your Notice of Assessment directly in your myGov Inbox. This makes it easy to access your tax records, track your tax history, and check your final tax position for the year. If you don’t have an online myGov account, you can set one up at the myGov website and link your ATO account for online access to all your tax information.
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How the Tax Assessment Process Works
After you lodge your tax return, the ATO will assess your information and calculate your tax payable based on your taxable income for the financial year. The ATO checks your income statements, any franked dividends, and other details you provide, including your Tax File Number. They also look at information they receive from other government agencies, banks, and employers to make sure everything matches up.
If everything is correct, you’ll receive your Notice of Assessment, which may show a tax bill if you have to pay more, or a refund if you’ve paid too much. Sometimes, the ATO may ask for further assistance, request more information, or even amend your assessment if they spot errors or inconsistencies. The ATO can also review your lodgment for certain circumstances, such as if they think you’ve claimed certain deductions incorrectly.
If you are unable to pay your tax bill by the due date, you may be able to request a payment plan, or in cases of financial hardship, ask for extra time to pay. The ATO can also help if you are experiencing serious financial hardship and need further support. You can contact them through ATO online services, visit the nearest ATO office, or speak to a registered tax agent for advice.
Essential Records Every Plumbing Business Must Keep
To reconcile your records with your Notice of Assessment, you need to keep good tax records. The ATO requires you to keep these records for at least five years from when you lodge your tax return. Your records should include:
Income and sales records: invoices, receipts, and records of all money coming into your business
Expense records: bills, receipts, and proof of payments for materials, tools, vehicles, and subcontractors
Banking records: statements showing all money going in and out of your business account
Employee and payroll records: pay slips, superannuation details, and records of wages paid
Records of payments to contractors and subcontractors for your Taxable Payments Annual Report
Keeping all these records up to date makes it much easier to check them against your Notice of Assessment when it arrives. If you use a registered tax agent, they can help you keep track of your tax obligations and make sure you have all the details you need.
Common Problems and How to Solve Them
Many plumbing businesses run into similar issues when reconciling their records with their Notice of Assessment:
Cash flow gaps: Sometimes, money comes in or goes out at different times, making it hard to match your records with the ATO’s assessment.
Mixing business and personal expenses: It’s easy to accidentally claim personal expenses as business deductions or use your business account for personal spending. This can lead to mistakes in your tax return and in your final tax position.
Not tracking all income: If you forget to invoice a client or miss recording a cash payment, your income statements won’t match your lodged tax return.
GST and tax calculation errors: Plumbing work can be complex when it comes to GST. Some jobs attract GST, while others don’t. Mistakes here can affect both your tax return and your Business Activity Statement.
Problems with subcontractor records: If you don’t keep good records of payments to subcontractors, or if you classify workers incorrectly, this can cause issues with your tax assessment.
If you find a mistake when checking your Notice of Assessment, you can request an amendment to your tax return through ATO online services, by contacting the ATO directly, or with the help of your tax agent. The sooner you fix any errors, the better—waiting too long can mean you owe more tax, or even face penalties.
Step-by-Step Reconciliation Process
When you receive your Notice of Assessment, here’s how to check it against your own records:
Gather your documents: Collect your income statements, expense receipts, bank statements, payroll records, and your lodged tax return.
Check your income: Compare your sales invoices and bank deposits with the income shown on your Notice of Assessment. Make sure all money earned is accounted for.
Review your expenses: Go through your receipts and bills to make sure all your business expenses are recorded and match what you’ve claimed.
Look at your tax calculations: Make sure the tax payable, any refund, and your final tax position are correct. If anything looks wrong, check your records again or talk to your tax agent.
Check for mistakes: If you find a discrepancy, contact the ATO to amend your return, or lodge a formal objection if you believe the assessment is incorrect.
Meet your payment deadlines: If you owe tax, make sure you pay by the due date to avoid interest or penalties. If you can’t pay, contact the ATO or your tax agent to discuss your options.
If you’re not sure about something, the ATO website has plenty of information, tools, and contact details for further assistance. You can also visit your nearest ATO service centre, or use ATO online services for help with your tax obligations.
Tips for Smoother Record-Keeping
Use ATO online services or myTax: These tools make it easier to lodge your tax return, check your assessment, and keep track of your tax history.
Consider using a registered tax agent: They can help you with your tax return, advise you on deductions, and help you stay on top of your tax obligations.
Keep your personal details up to date: Make sure the ATO has your current mailing address, bank details, and other personal details so you don’t miss important notices.
Use the myGov account portal: This gives you online access to your tax records, payment history, and linked services, making it easier to manage your tax situation.
Back up your records: Keep digital and paper copies of your important tax records in case you need to refer to them later.
What to Do if You Have Tax Trouble
If you find that you owe more tax than expected for the income year, or if you are unable to pay your tax bill on time, don’t put off dealing with it. The Australian Taxation Office knows that small businesses can sometimes face financial hardship, and they are often willing to discuss payment arrangements or provide further assistance if your situation meets their guidelines. You can reach out to them directly through their secure mail system, by phone, or by visiting your nearest ATO service centre to explain your circumstances.
When you lodge your income tax returns, it’s possible that the ATO may ask you to pay tax based on their assessment, even if you were not expecting such a result. If you disagree with the outcome, you have the right to lodge a formal objection outlining why you believe the assessment is incorrect. Gather any relevant documents and evidence to support your case, as this will help the ATO review your situation fairly.
If you need to pay tax and are struggling to do so, it’s important to communicate with the ATO as early as possible. Ignoring your tax obligations can make the situation worse, but if you take action and seek their help, they can often find a practical solution that works for both you and them. Remember, the ATO deals with these kinds of situations every day, and their goal is to help you meet your responsibilities while taking your business realities into account.
Final Thoughts
Reconciling your plumbing business records with your Notice of Assessment is a key part of running a successful business. By keeping good records, understanding your tax obligations, and using the tools and support available from the ATO, you can avoid surprises at tax time. Whether you do your own tax return, use ATO online services, or work with a registered tax agent, taking the time to check your assessment carefully will help you stay in control of your finances and focus on what you do best—running your plumbing business.
If you need help, remember that the ATO is there to assist, and your nearest ATO office or registered tax agent can guide you through any challenges. Don’t let tax worries drain your energy—take charge of your records, review your Notice of Assessment, and keep your business on solid ground.
Disclaimer: All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including ACT TAX GROUP PTY LTD, each of its directors, councilors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information. The Copyright is owned exclusively by ACT TAX GROUP PTY LTD (ABN 31634338088)