What is Audit Insurance and why is it a Must Have for SMEs and Sole Traders?
Posted 3 Mar '16
Posted 3 Mar '16
Each year the ATO has typically more than 640 million transactions reported to them. In this the ATO aims to contact in excess of 450 000 tax payers for data matching concerns, 245 000 pursuits around the cash economy, more than 43 000 GST and other indirect tax refund integrity checks, audits, reviews and more.
A review of the historic bench marking activity conducted by the ATO found that over 75% of the cases involved were found to be compliant or of low risk. Highlighting that even if you have been honest and thorough in your declarations, you can still be targeted for an audit, enquiry, investigation or review by the ATO.
An audit is very broadly defined as any matter from a basic phone enquiry to a complete review of lodged returns with the ATO, federal, state and territory agencies; and extends to engaging relevant specialists such as tax lawyers, if required.
The costs incurred can be significant, even if the lodgements are correct and no further adjustments are made.
Audit insurance provides cover for the payment of professional fees (such as accounting, legal etc), otherwise incurred by a client, when audits, official enquiries, reviews or investigations are initiated by the ATO or federal, state and territory agencies and the client is compelled to act or respond.
By now you know that cash is king in your business and managing your cash flow is crucial to success. Without audit insurance, you risk unexpected costs associated with being audited by the ATO that can essentially leave you out of pocket and significantly hurt the businesses cash flow.
We recommend audit insurance to all of our clients to ensure they are protected from the unexpected. To learn more about audit insurance and how it can help you in your business call us today on 07 3117 3736.
*All figures provided are based on information drawn from: Inspector – General of Taxation’s: Review into the ATO’s use of benchmarking to target the cash economy report and Australian Taxation Office’s Website.
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