Tax Audit Insurance

Tax Audit Insurance – What is it?

This is Insurance that covers your professional accounting fees should you be audited by the Australian Taxation Office (ATO) or any other Australian (Federal, State or Territory) government agency which has the statutory responsibility to conduct audits in relation to taxation, duties, levies or other such statutory imposts in connection with a Business.

Any client, individual or entity, can be the subject of an audit. Tax audits can be expensive and are on the increase.

What are random tax and government audits?
Audits, reviews and investigations are conducted by the Australian Tax Office (ATO) and other state and federal government agencies to ensure business and tax payer compliance with various tax and legislative requirements such as Income, Land and Payroll Tax, GST, Workers Compensation, Superannuation Guarantee, Compliance research, Development Grants and more.

How likely am I to get a random audit, review or investigation?
The ATO and other federal and state agencies, continue to announce they are increasing their audit activity. Increasingly, Individuals, Businesses and Self Managed Superannuation Funds are at risk of a random audit or review.

The ATO also publishes a compliance program annually. The segments they target are individuals - micro businesses (annual turnover under $2 million) and small to medium enterprises (annual turnover of over $2 million). The ATO continually increases its data collection or detection scope (including property and share transactions) under its data matching program that in 2007 - 08 accessed 78 million taxpayer income records. Benchmarking and risk profiling average business income and expenses is another ATO compliance detection tool. Statistically, a client can expect to be audited at least once every four years.

What are the costs to busineses and tax payers 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 involved in providing the required information. Even the simplest enquiry can require hours of work. In multiple years or multiple companies and trusts, thousands of dollars in accounting and legal fees can be incurred.

What audits, reviews and investigations are covered?

  • Income Tax
  • GST & BAS
  • Superannuation Guarantee
  • PAYG Withholding
  • Fringe Benefits Tax
  • Payroll Tax
  • Land Tax
  • Stamp Duty
  • Work Cover
  • Self Managed Superannuation Funds
  • And many other lodged returns

What is not covered?

  • audits conducted by APRA
  • incidental, routine enquiries
  • audits where notification was received prior to the cover being taken up
  • fraudulent, reckless, dishonest, criminal or malicious act or omission
  • false or misleading statements attributed to deliberate evasion, recklessness or carelessness unless the client could not reasonably be expected to know the status of the statement
  • criminal prosecution of the client
  • a client's activities where the collective turnover in the latest financial year is greater than $50 million


Who is covered?
Different levels of cover are available for:

  • Salary and wage earners;
  • Businesses or business groups with turnover under $100 million;
  • Self managed superannuation funds;

In many cases, individuals and family entities can be covered by the same policy that covers the business entity – for no extra cost.

Who can help?

An insurance broker's role is to act as your representative and work in your interests, seeking the best cover at the best price for you with their skill, market knowledge and experience. Call a good one.

Call CPR –Experts who will save you

  

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