Nobody likes a tax audit. Once upon a time, only the most prominent companies and the wealthiest people had to deal with these things. But in recent years, the ATO has reached out to many small and medium-sized businesses and requested an audit. A tax audit costs time and money. That's why Tax Audit Insurance is a good thing, but it's even better to avoid tax audits altogether.
What is a Tax Audit?
Tax Audit Insurance is essential for any business to ensure that it is covered against unexpected circumstances. Every good accountant strives for perfection and precision in preparing their clients' tax returns.
Over the years, the ATO has intensified its audit and compliance activities to recover substantial amounts of unpaid or underpaid taxes. This activity will continue to grow in the coming years.
Here are The Benefits of Tax Audit Insurance:
- It's Easy:
To be covered by an audit insurance service, all you have to do is fill out the customer acceptance form and follow the payment instructions.
- The ATO Has A Variety of Additional Resources:
Each year, the ATO provides funds to review, research and review the submissions of many individuals, companies and SMSFs. Audit activity is likely to increase with such resources available to the ATO, even those not previously addressed.
- You are Fully Covered -
All your current and previously filed returns are covered by the Audit service, even if you had a different accountant for your tax matters in the past. All federal and state tax authorities are affected, and the list includes income tax, ancillary services tax, GST, employee pension, wage tax, SMSF, WorkCover, property tax, and more.
- No Unplanned Fees -
If adjustments are required to your submitted returns, the cost of professional fees, including specialists.
It is Tax-Deductible -
An advantage of the Audit insurance service is that you can add it to your list of tax deductions each year.
Through the use of third parties, such as banks, employers, and insurance companies, the ATO can review and monitor the information provided on your tax return. If the ATO believes that you are not meeting your obligations, or if they believe an error was made in your statement, they may conduct a review or audit to investigate your issues and ensure that the information provided to them is correct.
Tax Audit Insurance can be time-consuming and expensive as they struggle to get the information from their accountant to perform the audit. It can start with a phone call or letter from an ATO representative and potentially turn into a full audit or investigation involving multiple meetings with your accountant and open access to all of your records and systems.
Audit Insurance length of the troubleshooting process varies from case to case and can range from a few days to many long and anxious months. Depending on the type, it can come out of your pocket for a very substantial amount of money.
Related Post: What Is the Significance of a Tax Audit Implication?