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Audit Insurance Vs Accounting Insurance

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ATO AUDIT COSTS ARE NOT ALWAYS COVERED IN ACCOUNTING INSURANCE

Knox Taxation & Business Advisory, in Boronia, want to ask you some very important questions –

 1.  Have you checked your Accounting Insurance Policy lately?

We know you’ll have received your Accounting Insurance Policy (or are about to) for the new Financial Year.  Where you may incur fees and charges for an ATO audit, investigation, review or enquiry, regarding your Income Tax Return, you may not be protected as well as you thought you were.  And that can come as a very unwelcome surprise.

The truth is, no matter whether your accounting is perfectly prepared and compliant, or not, an investigation by the ATO is still going to cost you money – and time!  You can’t just put the enquiry in the too hard basket.  You are expected to respond and prove that everything is hunky dory – or grovel appropriately if it’s not.

2.  Do you own Rental Properties?… because Rental Properties are particularly being scrutinised by the ATO this year.

The Australian Taxation Office (ATO) is prioritising the targeting of Rental Properties during the 2016/17 Financial Year, and it’s expected that this focus will remain in place for 2017/2018 as well.  The ATO has stated that they already contact 350,000 Australians each year regarding their Tax Returns – a third of which relate to rental properties.

In particular, the ATO are checking that:

  • All rental income has been declared
  • Deductions for private use have been apportioned correctly, and that
  • The property was genuinely available for rent.

If you own a rental property, the ATO may still be interested in reviewing your current (or previously) lodged Tax Returns, even if they are accurate.  You can protect yourself against the professional fees that can be incurred as a result of this ATO scrutiny.

 

Ask us about Audit Insurance at Knox Taxation & Business Advisory.  We’ll check your current cover (if you have it), and take the time to explain that not all Accounting Insurance Policies cover you for Government and Tax Agent fees.

We don’t want to see you caught out, and out-of-pocket, if you are unlucky enough to be on the ATO investigations list.

REMEMBER:  Even if you’re found by the ATO to be innocent of any wrong doing, you can still be financially affected.  Hence, it’s worth considering (and acting on) the option to protect yourself with Audit Insurance.

 

Why is Audit Insurance gaining importance?

Government Audit Funding has been proposed to be increased by 55% for the next four years, with the target of raising $3.7billion in extra tax revenue.  So, what does this mean for you?  We suspect there will be an increase in audit activity in relation to Individual, Business and SMSF lodged Tax Returns, and all sorts of other business compliance areas.

If you are contacted by the ATO, the onus of providing proof is all on YOU!

AUDIT INSURANCE PROTECTION COVERS FULL-BLOWN AUDITS AND TARGETED SMALL PORTION AUDIT REVIEWS, INCLUDING:

  • Income Tax
  • BAS / GST Queries from the ATO
  • PAYG Withholding Tax
  • Fringe Benefits Tax
  • State Revenue Fees e.g. Land Tax, Stamp Duty
  • WorkCover
  • SMSF
  • Payroll Tax
  • Employee Superannuation
  • Annual Subcontractors Reports
  • Capital Gains Tax
  • Motor Vehicle Substantiation, and
  • Centrelink.

Audit Insurance will also provide cover for:

  • Legal Fees
  • Bookkeeping Fees
  • Accountant Fees, and
  • Other professional adviser fees listed in the policy (up to a prescribed limit)

…and your Audit Insurance will cover previous Tax Returns as well (just in case any found issues are magnified across many years of returns).

 

We recommend that you check your level of cover, and, if the ATO comes knocking, please seek our expert advice, first-and-foremost.

The best action for you to take is to advise them that you would firstly like to talk to your Accountant.  We’ll be able to help and guide you, and more than likely reduce the time and cost required to attend to the audit activity in question (than if you try and handle the matter yourself).

 

Ask Us to Check Your Current Accounting Insurance Policy – and Make Sure You’re Audit Protected

At Knox Tax, we can put you in touch with the right people to arrange cover in case of an audit or review of any sort (as per the list above).  With any ATO audit, enquiry, investigation, or review of your Tax Return and compliance requisites, there will be professional costs involved and your current Accounting Insurance Policy may not be sufficient.

We’re not trying to scare you – we’re just presenting the facts.

So, if you want to be in good hands,

Contact us here at Knox Tax: (03) 9762 7344

 

Kind Regards,

Coral Page – Principal

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