Audit activity can affect all taxpayers including individuals, business or self-managed superannuation funds (SMSF). Depending on the circumstances, the cost of being properly represented can be quite considerable and even a simple enquiry can require hours of work.
Should you or your business be selected for review, the audit or investigation process can be quite time-consuming. Depending on the type of audit, the scope of the review and the number of periods being audited, the related professional fees can add up.
WHAT IS TAX AUDIT INSURANCE?
Tax Audit Insurance protects individuals, businesses and Self-Managed Superannuation Funds from the unexpected costs incurred in the event you are selected by the Australian Taxation Office (ATO) for an audit. This insurance reimburses you for related professional fees and associated costs incurred when responding to a compliance audit or an audit of a return you have previously lodged.
WHAT IS COVERED UNDER TAX AUDIT INSURANCE IN THE EVENT I’M AUDITED?
Depending on the scope of your policy, it may cover you for professional fees (up to a specified limit) such as your accountant or advisor assisting you to respond to an audit, inquiry, investigation, review or examination of returns lodged with the ATO or other government revenue authorities.
Policies typically cover claims relating to:
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Business Activity Statement (BAS) / GST
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Fringe Benefits Tax (FBT)
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Income Tax
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Payroll Tax
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Record Keeping
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Superannuation Guarantee Charge
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Self-Managed Superannuation Funds (SMSF)
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Workers’ Compensation
WHY IS TAX AUDIT INSURANCE IMPORTANT?
Tax audits are no longer targeted at big business. Small to medium enterprises, SMSFs, individuals with rental properties or trust structures are subject to review and investigation by the ATO.
Audits are not only conducted by the ATO, other government and state authorities are also known to request audits that can extend further to record keeping and Superannuation Guarantee Charge.
With the increased usage of data matching, the probability of a review occurring has risen due to government authorities using artificial intelligence to compare disclosures in lodgements to those of other taxpayers or benchmarks.
Should you or your business be selected for review, the audit or investigation process can be quite time-consuming. Depending on the type of audit, the scope of the review and the number of periods being audited, the related professional fees can add up.
SEEK ADVICE AND BE INFORMED
Tax Audit Insurance is not compulsory; however we do suggest that you consider and understand the options a policy can provide in the event of an audit or review of your financials.
Before taking out a Tax Audit Insurance policy, we encourage you to obtain advice and review the inclusions and exclusions of the policy carefully as there can be items that are generally not covered by Tax Audit Insurance policies, these can include:
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Fines or penalties imposed and any amounts payable pursuant to an amended notice of assessment or adjustment.
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Matters in relation to applications, assessments or reviews of government benefits, entitlements, grants and any form of activity involving a review relevant to you maintaining industry status (e.g. licence compliance, membership).
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Costs for work incurred which should have been undertaken prior to the audit activity (eg. outstanding lodgements).
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Audit activity where notification was given prior to the inception of cover such as Excess superannuation contribution tax issues.
HOW CAN MOORE AUSTRALIA HELP YOU?
Moore Australia offers Tax Audit Insurance for our clients through a third-party provider. If you would like to find out more, please contact your local advisor.