By Amanda Kenafake

We hope that you won’t need Tax Audit Insurance, however the ATO have been advising that they are increasing their audit activity. It may be inevitable that you will be chosen for an Audit, Review, Investigation or the like. Whilst all parties involved would have ensured accuracy you would still need to go through the process of the audit if chosen. So why should you bear the costs?

We are witnessing an alarming trend with more and more clients being contacted by the Australian Tax Office (ATO) or other government agencies and subjected to random audits, reviews or investigations.

In fact at the end of June 2011, the ATO confirmed they have planned a 25 % increase in audits of 2.8 million traders with sales under $2 million.

Random audits, reviews and investigations of Australian organisations – both large and small – are increasing in number. There are dozens of scenarios that may trigger an ATO audit and just because you are certain that you are doing the right thing in your business or Self Managed Super Fund, you are not immune to an audit.

In the next year the ATO will:

• contact 400,000 taxpayers who have apparent discrepancies in the information they report;
• review over 30,000 Income Tax Return (ITR) refunds before issue;
• review 24,500 micro businesses in regards to PAYG withholding;
• contact 12,500 mainly micro employers regarding unpaid superannuation;
• review 4,000 high risk employers micro businesses for non compliance with superannuation guarantee obligations;
• identify 46,000 businesses potentially under-reporting their cash income;
• undertake 580 property related GST audits and reviews;
• verify 47,000 BAS refund claims for micro businesses;
• complete 380 risk assessments and reviews and 60 audits of the 2,660 highly wealthy individuals ($30M+);
• complete 400 risk assessments and reviews and 55 audits of the 82,000 wealthy Australians ($5M – $30M);
• review 3,400 small to medium enterprises in regards to PAYG withholding;
• review contracting arrangements in small to medium enterprises;
• undertake over 12,000 audits and reviews of BAS refunds in small to medium enterprises;
• conduct around 1,200 audits and reviews relating to property transactions; and
• undertake approximately 480 audits and reviews of integrity of business systems in small to medium enterprises.

To protect you from these potential costs, we offer the opportunity for you to participate in our Audit Shield Service. This service provides a low cost, set fee solution that means any ATO audit related work we need to do for you is covered (up to a prescribed limit).

Tax Audit Insurance covers the professional fees incurred as a result of an ATO review, investigation or audit, which compels the client to respond.

Tax Audit Insurance covers the professional fees for assisting you to respond to an official enquiry, review, investigation or audit, of returns lodged with the Australian Tax Office or other Federal, State or Territory government authority, agency or body.

Tax Audit Insurance provides cost effective protection and peace of mind against the substantial cost that may be incurred should the ATO or other government agency conduct a random review, investigation or audit, to ensure business or taxpayer compliance with various tax and legislative requirements such as:

• Income, Land and Payroll Tax
• BAS/GST Compliance
• Workers Compensation / WorkCover
• Superannuation Guarantee and Compliance
• Self Managed Superannuation Funds
• FBT
• Record Keeping
• Research and Development Grants
• Any query of any lodged return where the client is compelled to respond or act

If you are seriously considering Tax Audit Insurance, make sure you contact us first so we can assist with ensuring you get adequate and correct cover!