Compared to a car insurance, tax audit insurance is not compulsory. You have the option to forget about tax audit insurance but there are several benefits that you can get if you would obtain the service. Tax insurance is commonly offered by accounting firms to their clients. Although tax audit insurance is not a must-have, you will be surprised at its financial benefits during audit inquiry.
With tax audit insurance, you are ensured that you will have financial coverage for all the costs and professional fees that will be collected from you or your business during investigations, enquiries, reviews and audits initiated by the Australian Taxation Office (ATO) or other concerned government agencies. Reviews or tax audit can be conducted on lodged return or compliance obligation. The audit can be conducted randomly or they can be instigated on individuals or business establishments with questionable tax statements or misrepresentations that requires review. Although buying a tax audit insurance is not compulsory, it is advisable to purchase one if you are in an industry that is vulnerable to random tax audits. Here are some examples.
The government can conduct random audits on business establishments and firms to ensure that they are duly complyingwith government imposed taxes such as land and payroll tax, workers compensation, fringe benefits tax, goods and services tax, employer obligation and many more. ATO and other government agencies can check the company’s books, record keeping and other significant documents. The audit procedure can take several days to weeks and this requires attention. It would be best for a business establishment to have a representative who will focus on the process. The process will also involve fees and charges and they will be paid by the institution being audited. Without a tax audit insurance, the fees can be heavy to the subject as it could take thousands of dollars.
Ordinary tax payer
Even an ordinary citizen should also obtain a tax audit insurance for him to have an accountantwho will represent him during the inquiry. To purchase a tax audit insurance, consult an accountant for him to coordinate with the tax audit insurance company.