When you hear of someone getting audited by the ATO, you don’t usually think the same thing will happen to you or your business. After all, what interest could the ATO have in your situation? Unfortunately, random tax audits or reviews are becoming increasingly common which is why you should consider having tax audit insurance in place.
What is tax audit insurance?
A tax audit involves the ATO looking into your affairs to ensure the information you have provided is correct and that you have complied with your obligations. During the audit, other parties such as your bank may be contacted as part of the process. If there are discrepancies found during the audit, you may be required to pay money to the ATO. If you find yourself on the receiving end of a tax audit, it can be a costly, stressful and time consuming process.
The ATO continue to announce they are increasing their audit activity and this means that individuals and businesses are at risk of a random audit or review. When an audit is underway, you’re responsible for providing the requested information and this can be an expensive exercise if you want to go through an accountant or lawyer.
Tax audit insurance will cover you if you hire a professional lawyer or accountant to complete the tax audit on your behalf. The process can be complicated, particularly if you own a large business, which is why most people choose to hire a professional during an audit. With your audit insurance, your insurer will cover this cost so you don’t need to worry about being left with a hefty bill.
Hiring a professional during a tax audit means that your best interests are fully represented throughout the process and also means that you’re not left with the onerous task of providing all information yourself.
Peace of mind at audit time
Although your tax audit insurance won’t cover you if you have to pay any additional money to the ATO after the completion of the audit, it will cover the cost of the professionals you hire during the audit process. It can be tempting to think an audit will never happen to you but the ATO complete audits on a routine basis and there’s no reason to think you or your business will be immune.
Having tax audit insurance in place means you can immediately hire someone to complete the audit on your behalf rather than having the added stress of having to face the audit alone. For this reason, it’s important to consider taking out tax audit insurance for financial peace of mind.
The information above is of a general nature only and should you need advice please consult your insurance broker. For more information on tax audit insurance or for a quick quote, contact Elliott Insurance Brokers today.