What is audit insurance? 8 Collective Gold Coast Accountants

What is Audit Insurance?

Audit insurance protects you from the costs incurred in responding to an unexpected tax or government audit.

The likelihood of being subjected to a random audit is increasing every year especially with the Government’s introduction of schemes like JobKeeper.

Responding to official queries and audits can be stressful and costly to yourself and/or your business. If you’re a business owner, you could risk damaging client relationships by submitting unexpected invoices (that could run into thousands of dollars) or you may need to write off chargeable hours, costing you valuable time and money.

Is there any way to avoid an audit?

There are certain anomalies in a tax return that can ‘trigger’ a tax audit, but each year the Australian Taxation Office (ATO) chooses a number of specific areas of focus, and will often conduct random audits on tax returns these show up in. An audit is seldom a reflection of the work that is put into preparing the returns and is more often than not due to these specific crackdowns by the ATO or other State government revenue authorities.

However, if you find the ATO does come knocking then you want to ensure all your paperwork is in order and ready so the ATO can access all the information they need.

“Responding to official queries and audits can be stressful and costly”

Is Audit insurance only beneficial if you have a business?

Whilst historically Tax Audits were targeted at big business and the wealthy, this has changed. Increasingly the ATO and other Government Agencies are turning their attention to both small to medium businesses and individuals, particularly those who own rental properties, operate trusts, and/or have a Self Managed Super Funds.

By taking out audit insurance, you can pass on the stress of gathering paperwork and responding to the ATO to the professionals – regardless if you are a business owner or an individual.

Audit insurance takes effect once you have been contacted by the ATO and officially been told you’re undergoing an audit. The insurance policy will cover accountancy fees incurred in responding to enquiries, questionnaires, audits, reviews and investigations of clients’ lodged returns, including those from previous years. It will also cover specialist fees, including legal fees. The following official audits, enquiries, investigations and reviews are covered:

  • Income, Land and Payroll Tax
  • BAS/GST Compliance
  • Workers Compensation/WorkCove
  • Superannuation Guarantee and Compliance
  • Self Managed
  • Superannuation Funds
  • FBT
  • Record Keeping

The ATO and other relevant government revenue authorities in Australia are not going anywhere and a taxation audit can take weeks, sometimes even months taking all sorts of expertise and resources to ensure everything is in order for the ATO.

We care about your financial well being and are here to answer any questions you might have around audits and protecting yourself and/or your business with Audit insurance.

Speak to us today if we can be of any assistance.

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