Have you considered the need for tax audit insurance?
July 29, 2022
As the new financial year kicks into gear, it’s important to set yourself up for success by putting measures in place to protect your business and personal interests. Ongoing developments in data-matching technology have allowed the ATO to increase the scope and scrutiny of taxpayer reporting, leading to an increase in audit and review activity. Tax Audit Insurance can provide you with protection that minimises the financial impact of an audit.
Are you an audit target?
Anyone can be targeted for audit activity, even if your filed returns are accurate.
Historically, tax audits were targeted at big business and the wealthy, however data-matching technology has enabled the ATO and other government agencies to turn 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 Fund.
Sophisticated data-matching technologies enable the ATO to further examine income tax returns; targeting areas including government benefit schemes, work-related expenses, capital gains tax on investments, tax on rental properties and omitted income such as that received from overseas or distributed through partnership trusts. A draft taxation ruling (TR 2022/D1) released in February 2022 may see the ATO conduct further analysis into the tax treatment of trust entitlements arising out of reimbursement agreements and unpaid present entitlements of trust beneficiaries.
What does a review or audit involve?
Reviews and audits generally involve the ATO looking at your affairs and requesting supporting documentation in relation to the amounts reported. A review is conducted to ensure the information you have provided is accurate, that you’ve met your compliance obligations and to determine whether there are any issues that require further investigation. An audit is performed when further information or a more detailed investigation is required.
How long will the audit take?
An audit or review can take anywhere from weeks, to several months, or even years to be effectively resolved, and can result in significant costs and disruption to you and your business.
Engaging a professional, such as your accountant, to manage the response process on your behalf can minimise the disruption to you, assist with achieving an expedient resolution of the matter, and potentially reduce the likelihood of further enquiries.
What costs are involved?
Responding to a review or audit request can incur significant professional fees. Even matters with little complexity, or with no adverse outcome, can be time consuming, stressful and expensive.
A tax audit insurance policy can provide an affordable and effective solution to help cover the cost of professional fees (up to a prescribed limit) should you, your business or your self-managed superannuation fund be subject to a random audit, investigation or review.
What does a tax audit insurance policy cover?
The policy covers a broad range of reviews (for current and prior year lodged returns) including, but not limited to:
- ATO Income Tax audits & reviews
- BAS audits and enquiries
- Workers Compensation
- Centrelink
- FBT
- Payroll Tax
- Self-Managed Superannuation Funds
Apiary Financial can help
At Apiary Financial, we recognise that the time, effort and costs involved in our staff responding to audit matters on your behalf can be substantial, and a drain on your business resources. With this in mind, we hold a Tax Audit Insurance Policy in our business name (underwritten by Insurance Australia Limited ABN 11 000 016 722, AFSL 227681 trading as CGU Insurance)*. We are able to extend this cover to include you and any of your associated entities under our group policy for a fully tax deductible fee.
If you elect to partake in this service and you are then subject to an audit or government review, this policy will cover our professional fees (up to a prescribed limit) for any audit activity related to current, and previously lodged, returns. The cost of the policy, which is determined by your turnover category, includes a fee payable to Apiary Financial to recover some of the costs of providing this service to you.
This policy is offered on an opt-in basis. If you would like to get an obligation-free quote or have a question about participating in this service, please contact our friendly team on (07) 3217 2477.
Further information regarding policy inclusions and exclusions is available for download here: more information.
Clients with existing audit insurance policies
Many of our clients already participate in our tax audit insurance service, and will shortly receive an invitation via email to review their existing cover and renew their policies.
If you would like to get an obligation-free quote or any further information regarding our tax audit insurance policy, please contact our friendly team on (07) 3217 2477.
*From 1 August 2022, all new clients participating in our tax audit insurance service will be covered under a policy underwritten by Agile Underwriting Services (ABN 48 607 908 243, AFSL 483374) for and on behalf of certain underwriters at Lloyds.