AM I AT RISK OF A TAX AUDIT?

The following information is General Advice and is not personalised for your unique needs, objectives or financial situation. Please get in touch with your advisor before taking any action on the below points, so they can advise if the solution is appropriate for you.

In 2016, the Australian Taxation Office (ATO formed the Tax Avoidance Taskforce. The Taskforce was formed to ensure that many different types of Taxpayers are paying the correct amount of tax. This can include Audit of (but not limited to):

  • Businesses
  • Individuals
  • SMSF and other trust arrangements
  • Rental Properties
  • Work Related Expenses

In the 2019-2020 Federal budget, a further $1 Billion (Yes you heard right, “Billion”) was committed to further extending this Taskforce’s operation into 2022-2023. Since June 2021, this task force has helped raise an extra $22.9 Billion in tax liability for the ATO – a very profitable exercise!

More information about the task force can be found on the ATO website. 

What types of audits or investigations are the ATO undertaking?

Even if you have a great Accountant looking after you and your records are squeaky clean, that’s not going to prevent you from being contacted by the ATO or other government revenue authorities regarding one of the following:

  1. Audit
  2. Review
  3. Inquiry
  4. Investigation
  5. Examination

Some are less serious than others but can chew up time and often require professional assistance, which can be costly.

“How do I protect against this?” I hear you ask. Read on to find out more about what coverage is available to you and your business in the event of a tax audit or investigation.

What is Audit Insurance and what are the benefits?

Depending on the policy, Audit Insurance can provide for the payment of professional fees incurred if you are selected for an audit, inquiry, investigation or review (audit activity) instigated by the ATO or other relevant government revenue agencies.

Insurance policies can cover costs (up to a prescribed limit) for the current year and, additionally (if included), all previous years’ returns, including late lodgements. They are also relatively inexpensive and depend on the size of the Taxpayer. Therefore, they can represent a great value compared to the cost you incur if you are selected.

In most circumstances, associated individuals and family entities can be covered for no additional cost, providing extended coverage across family trusts and family businesses.

What does Audit Insurance cover?

What does it cover, I hear you ask? Well, it’s pretty extensive, but here is a list of what audits and investigations it typically includes:

  • BAS and GST Compliance
  • Capital Gains Tax
  • Employee Obligations
  • Income Tax
  • Superannuation Guarantee
  • Worker Compensation
  • Land Tax
  • Record keeping
  • Payroll Tax
  • Self Manage Superannuation Funds (SMSF)
  • Stamp Duty
  • Fringe Benefits Tax
  • PAYG

 

Watch the short video below to find out more

 

How much does it cost, and what are the potential savings?

Audit Insurance is available for as little as $150 per year for individuals earning less than $150,000 per year. It entitles the individual to claim up to $10,000 in fees incurred for personal taxes, shares and property-related investigations. Cover is also available for businesses and the cost is determined by the annual turnover of the business.

Audit Insurance policies are available to purchase or renew each year on the 31st of May.

To find out more and to determine whether Audit Insurance may be suitable for you, please reach out to your Morrows advisor.

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