THEIMPORTANCEOF TAX AUDITINSURANCE

B A K E R A F F L E C K M O F F R E Y

2016

Why is Tax Audit Insurance SO important?

The Tax Commissioner of Australia has predicted that almost 15% of small tomedium sized businesses will be subject to the Australian Taxation Office’s (ATO)compliance program leading to some form of tax audit. We also know that the ATOis continuing to announce increases in their audit activity.

These often unforeseen investigations are performed by the ATO and any otherfederal, state or territory based agencies who have the statutory responsibility toconduct audits relating to duties, levies, taxation or other imposts in relation to the“Return of a client.”However, being involved in such a process can be costly, stressful and time-consuming for clients.

Tax Audit Insurance extends to any professional fees incurred in responding to aclaim, representing you, during a review, audit or investigation. The insurance alsocovers legal fees, bookkeeping fees and specialist professional advisor fees (such asquantity surveyors). As a result, you may benefit from the avoidance of disputeswith your accountants regarding fees resulting from an audit as well as possiblefee write-offs.

We care about our clients, and want you to have the peace of mind to know thatany costs will be covered and will not completely deplete your cash flows.

Any of the following enquiries, reviews, audits and investigations are covered byTax Income Insurance:• Income Tax• Land Tax• Payroll Tax• BAS/GST Compliance• Workers Compensations/WorkCover• Superannuation guarantees and compliance• Self-managed Superannuation Funds• Fringe Benefits Tax• Record Keeping• Research and Development Grants (ATO Only)• Stamp Duty

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W H A T T Y P E S O F E V E N T S A R E C O V E R E D ?

While we cannot give you a concrete answer, as a guide, individuals and businesses witha turnover of less than $1 million would benefit from a cover of $10,000. Businessesturning over between $1 million and $10 million would enjoy cover of $20,000. This maychange depending on your circumstances and is calculated based on your business’sincome.

The main exclusions from being covered under Tax Audit Insurance policies are:• The review or audit was underway before coverage began.• The return that is the subject of scrutiny was prepared fraudulently;• The ATO impose a final culpability penalty of 75% or more (typically, this is in cases ofrecklessness or deliberate evasion);• There are fees associated with a criminal prosecution; • Costs are incurred for work which should have been done prior to the audit or reviewtaking place;• Matters in relation to the application, assessment or review of government benefits orentitlements.

Baker Affleck Moffrey prides ourselves on only working with the best insurance providersto deliver premium quality service to our clients. Our premium and comprehensiveinsurance product, Audit Shield, is underwritten by Accountancy Insurance. Werecommend it to all clients as it is comprehensive, innovative but most importantlybecause the costs of conducting an audit can be exorbitant.

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W H A T P R O V I D E R D O W E U S E ?

Should you need any more information or adviceplease do not hesitate to book an appointment by

calling 07 5538 3088.