So you’ve been slammed with a tax audit
You’ve submitted your financials for the year (or at least, your accountant has), you’ve dusted your hands off, and everything seems hunky-dory. That is, until you receive the dreaded letter from the ATO, informing you that your business has been selected to participate in a tax audit. You may have thought you’d never be pulled up for a tax audit – it’s one of those things you’d never be randomly selected for, like jury duty. Tax audits are well and truly alive here in Australia, so here’s some further reading on what you must do to comply if you do get summonsed to participate, and how you can (kind of) get around it with Tax Audit Insurance.
What is a tax audit?
A tax audit is a review examining your tax affairs that the Australian Taxation Office (ATO) or any authorised Australian government agency or authorityundertakes to see if you have done everything that the law requires you to do. This includes assessing whether or not you:
- Have declared all assessable income received
- Are entitled to the deductions and offsets you have claimed
- Have met regulatory obligations
Regardless of whether you have been factually correct in your claim or not, the ATO will require you to participate and provide them with any and all information they request. It could be to do with a specific issue they are chasing, or it could be an audit they are conducting at random. Either way, you must comply.
What you have to do
Sometimes a tax audit may come in the form of a phone call or simple letter asking you to provide further information about your tax return or to verify certain information. Other times it can be a lengthy and drawn out process involving tax officers or you going through boxes of receipts, statements and other documentation to provide requested information. When it gets messy like this it can be difficult to get on with your everyday work when you are required to spend days or even weeks sorting through files to find specific details and figures, or paying for a professional to do all this. When your everyday work is compromised like this, so is the cash flow into your business as a result, but thankfully, there is a gem called Tax Audit Insurance.
Tax Audit Insurance
Tax Audit Insurance brokers can help you take out Tax Audit Insurance, and explain more about exactly how it works. However, in a nutshell, Tax Audit Insurance can cover you by paying to hire a professional or your accountant to carry out an audit for you. This means you don’t have to pay the costly hiring fees, and can get on with your everyday job to keep the money coming in as it should.
For more information on Tax Audit Insurance, brokers like us can provide you with a quote online, or you can call our office on 1300 GETCOVER (1300 492 862) to speak to our Contractor Cover real-life team.