Audit Insurance
16 July 08
Every taxpayer, salary or wage earner, company, firm, trust or partnership can expect to be audited at least once within the next four years by the Australian Tax Office since the introduction of the new tax system, GST and BAS (Business Activity Statements).
Tax Audit Insurance allows Accounting Practices to provide a value-added service by ensuring that their clients, if and when targeted by the ATO or other Commonwealth, State or other Regulatory Institution for a tax audit, are not faced with unexpected professional audit fees charged by their Accountant.
Some of the latest example cases include:
- An electrical contractor incurred expenses of over $1,000 as a result of an audit on record-keeping
- A motor vehicle sales business incurred over $1,000 as a result of a Prescribed Payment and Group Tax audit
- A manufacturer faced a bill of over $45,000 after an audit on Fringe Benefits Tax for the current and preceding year. The audit was extended to cover the preceding two years
- A motel business needed $19,600 to cover professional fees incurred as a result of an audit on income tax for the current plus two preceding years
- Professional fees of $9,680 were incurred by a property group when the ATO investigated three years of Capital Gains Tax
- A Workers' Compensation audit by Work Cover cost the company investigated $4,780 in fees
- A company incurred $4,670 in professional advice sought when the NSW Government inspected three years of payroll records
In a Super Fund audit, APRA scrutinised three funds – and cost the two companies involved $13,445 in professional fees
The probability of a taxpayer being selected for a tax audit has never been higher.
According to the recently-issued “Compliance Program 2003-2004”, the ATO plans to:
- Contact over 85,000 businesses in order to investigate undeclared income
- Visit around 20,000 businesses with one of 600 specially-trained officers experienced in detecting omitted income and identifying businesses that operate outside the tax system
- Use its 2400 officers to identify cash economy issues as part of their compliance reviews
- Perform an audit of 1 in 10 small businesses on GST and Income Tax primarily, but also on PAYG, Fringe Benefits Tax and Super contributions
- Focus on inconsistencies between Business Activity Statements (BAS) and income tax returns
Tax Audit Insurance is only available through your Accountant and covers:
- Audits conducted by the Australian Tax Office (Insured Event A)
- Audits conducted by a Commonwealth, State or Territory Department,
Body or Agency (Insured Event B)
- An obligation to pay an amount under Commonwealth, State or Territory legislation, such as Payroll Tax, Stamp Duty, WorkCover or Customs
- Retrospective Cover is included (at no extra cost)
AAP-
Need more information on Audit Insurance, contact PJT on 5413 9300.