Tax Audit Insurance
Tax Audits can be time consuming, stressful and a costly exercise but they are a fact of life if you run a business, own a rental property or have your own self managed superannuation fund.
Our philosophy includes helping you protect your assets so we offer our clients the opportunity to insure against the accounting costs you might incur in a tax audit. Below are some commonly asked questions regarding tax audit insurance.
What are random Tax and Government Audits?
How likely am I to get a random audit, review or investigation?
The ATO, along with other federal and state agencies continue to announce significant increases in their audit activity. Now more than ever, Individuals, Businesses and Self Managed Superannuation Funds are at risk of being selected for a random audit or review. A lot of audit activity is computer driven by industry benchmarks and the ATO’s 'Big Brother' computer is also targeting specific industries including the cash economy.
What are the costs to businesses and taxpayers in the event of a random audit, review or investigation?
If your business or individual return is subjected to a random audit, review or investigation, you are responsible for the costs (professional fees) involved in providing the required information. Responding to even the simplest enquiry can involve hours of work and if your audit extends to multiple years or multiple entities you could incur thousands of dollars of accounting and legal fees. The cost of being properly represented in these matters can be quite considerable depending on the length of time involved.
How can I protect myself from the costs of random audits, reviews and investigations?
We can offer you an Audit Shield Service which can relieve you of these fees to a capped limit. The policy provides for the payment of the professional fees incurred as a result of you being selected for an audit, review or investigation by the ATO or other Government body. The Audit Shield Service provides a fixed, cost effective solution to guard against these costs.
What Costs are covered?
The service covers all professional fees up to a prescribed limit (with no excess) when responding to, or representing you in an audit, review or investigation. These include not only our fees, but also legal fees, bookkeeping fees and specialist professional advisor fees (e.g. quantity surveyors, valuers, and actuaries).
Who is covered?
clients can take advantage of the Audit Shield Service. Different levels of cover are available for:
- Salary and wage earners
- Businesses or business groups
- Self Managed Superannuation Funds
Sometimes we hear a few misconceptions about the tax audit insurance offering, Audit Shield. Here are a few common myths and explanations.
Myth 1: “Audit Shield only covers audits”The comprehensive policy covers all audits, enquiries, investigations and reviews instigated by the Australian Taxation Office (ATO) and other federal, state and territory government agencies. All previously lodged returns are covered too as long as the client has Audit Shield cover in place at the time the notification of the audit is issued.
Myth 2: “I don’t need Audit Shield. I have a good accountant”
The Federal Government has provided $77.8 million to the ATO to expand data matching with third party information and will check 640 million transactions* which is forecasted to generate revenue of $610.2 million over the period until 2018**. These transactions will not discriminate between ‘good’ and ‘bad’ accountants and do not reflect on the abilities of an accountant. Once the Audit Shield policy is in place, accountants and clients alike are relieved with the peace of mind that Audit Shield provides.
* Australian Taxation Office’s Compliance in focus 2013-14
** Australian Government - www.budget.gov.au
What do I need to do to take up the Audit Shield Service?
Contact us and we will send you an information pack.