Many businesses don’t have Audit Insurance. However, it is important to know that if you are selected for an audit by the ATO, it can become very time consuming and costly to meet requirements. By having audit insurance, you’re accounting and professional fees are covered by this insurance.
What is Audit Insurance?
Audit insurance is a professional insurance that will cover your professional fees (Accountant), when you are subjected to an ATO audit. Some of the types of tax audits are income tax audit, GST audit, FBT audit and workers compensation audit, plus many more.
Why you need an Accountant to compile your documents for audit
If you do receive an ATO audit, it is important, especially for business to have an Accountant help you compile the items needed for the audit and write the response to the ATO. The reason being, the taxation act is over a thousand pages long and interpreting it without the correct expertise can land you in trouble with the ATO. Remember, the ATO have a lot of powers and if you are found to be in breach they can levy fines. So it is better to have an Accountant on your side.
How likely am I to receive and audit?
There are really no published statistics as to how many individuals and businesses undergo audits each year. Audits can be random or targeted, so there is no way to know the likelihood of receiving an audit. The ATO in recent years have been announcing they are increasing the amount of audits they complete each year, so your chances are increasing.
How much does it cost?
Audit insurance is relatively cheap, but does vary from person to person and business to business. Most accounting firms will offer you audit insurance. So it is up to you to opt in for this service or carry the risk.