Current ATO audit activity is extensive. Recently, the ATO Commissioner forecast that 2 in 10 businesses would be subject to some sort of audit activity during the year.
If you are a business owner, you should strongly consider tax audit insurance. This style of insurance is becoming an increasingly popular means of protecting oneself against the costs arising from a tax audit. Insurance is available to cover professional fees incurred as a result of an audit from a government department (including the ATO).
These fees can run into the thousands if the audit is protracted as is often the case in relation to complex transactions and business affairs. Audit insurance provides an inexpensive and tax-deductible way of covering your audit expenses. The period covered by insurance is typically from the time an audit commences until the time it is complete.
Examples of the audits that are typically covered under a policy include:
- Income tax
- Capital Gains Tax
- Payroll tax
- Superannuation Guarantee & Compliance
- Self Managed Superannuation Fund
- Record keeping
- Substantiation, and
Talk to your accountant/financial advisor.