Tax Audit Cover is insurance that cover fees and charges for an accountant or tax agent to respond to a notice from the Australian Tax Office. The ATO can request the business owner to pay relevant tax such as income tax, capital gains tax, GST,termination payments tax etc. The policy is not designed to cover legal fees, or any payments, fines or penalties issued by the ATO. d is not designed for the Directors personal tax.
Tax Audit can be selected to cover a dollar value starting from $10 000 cover. Higher options are available. You can select as high as $1 000 000 for larger businesses. Tax audit cover/insurance is a section of cover we can select for your business. Normally provided under a business insurance policy.
Why have Tax Audits?
The main reason the ATO conduct these audits is because there is up to 70% of the randomly selected tax returns that contain errors. The ATO carries out a risk review to determine if there is any compliance issues that need a more in-depth investigation by the ATO. Think you are safe? We always ask our clients to use an accountant and follow the right processes.
Will you be audited?
Hard to say if ever you will be audited. The ATO randomly select almost 1 million ‘compliance activities’ each year.
What would trigger a Tax Audit from the ATO?
There are generally 4 common triggers:
- Showing operating losses consistently year on year
- Employees super payments paid incorrectly or late
- ATO use industry comparisons on how your business perform against your competition
- When there are clear discrepancies between tax returns and the business activity statement (BAS)
How Grace Insurance can help
At Grace Insurance, your local insurance broker near you in Joondalup, Wangara, Malaga, Ocean Reef and Whitfords. We customise personal insurance solutions for business owners, just like you. Together with our insurance partner, we can help cover you with tax audit insurance (a insurance section you need to select). We can also guide you with your insurance needs. Along with this, we can assist with any insurance claims relating to (potential) tax audit claims. Grace insurance provides peace of mind, transparency and choice. Utilising an expert insurance team, we empower informed choices with unparalleled quality. At Grace Insurance, we’re your trusted business partners in insurance. Situated in the beautiful state of Western Australia (WA), Perth, we’ll take care of your insurance needs. Contact us to see how we can help you today with Business Insurance that include tax audit insurance today.
CLAIMS EXAMPLE – COMPLIMENTS DUAL INSURANCE PROFILE: Bed & Breakfast Hotel, sole trader Employing 7 staff, $900,000 turnover.
BACKGROUND: The office of State Revenue conducted an audit in relation to tax returns previously lodged by the Insured.
OUTCOME: The insured purchased the Tax Audit Extension for State and territory bodies under their management liability policy. They were able to claim in respect to ‘Accountants’ costs in responding to the audit.
The information contained in this article is meant as a hypothetical guide only. Grace Insurance does not accept any liability arising out of any reliance on the information in this article. We urge you to consult your insurance broker for personal advise, as we only provided general advise.