Nobody wants to receive a letter or a phone call from the tax authorities. An accounting practice or a client can be the target for a tax audit. A nightmarish experience can be avoided through Audit Shield which is a tax audit insurance solution that provides protection against the considerable costs that will incurred during the tax audit.
This year, the Australian Taxation Office (ATO) has revealed a planned crackdown on work-related expense claims. This can result into more than a million interactions including audits on taxpayers who have made claims along this area. Roman Kaczynski CPA and director of Accountancy Insurance said that there are a great number of red flags that can trigger an audit or review on the tax returns.
Claims with the highest frequency include business activity statement audits. The focus of audits is usually rental property owners and businesses involved in the black economy. However, it is not uncommon for restaurants and takeaway shops and stores that conduct a lot of cash transactions to receive a notice from the tax authorities. Cryptocurrency compliance is also getting its fair share of attention.
The outcome of an audit investigation is not always negative but the process itself can be a nightmare. According to Simon Flowers, FCPA, principal at LBW Business Wealth Advisors, it can take between 10 and 20 hours to collect all the information that will be required. This means at least $3000 to $4000 in costs. If a client does not have audit protection insurance, it becomes a serious problem.
Without audit insurance, accountants are putting themselves into a vulnerable position. It can be quite difficult for an accountant to recover the professional fees. With ATO’s random audit program underway, even the most vigilant taxpayer can be targeted. It makes sense to be prepared because audit insurance will alleviate the stress during the audit process.
Without Audit Shield, the process of audit can be particularly stressful for both the accountant and the client. Aside from the professional fees, there are associated costs of ATO audits. It makes sense to take advantage of the opportunities provided by audit insurance to avoid sleepless nights during the investigation.