Many of us buy health insurance to cover the unforeseen expenses arising out of emergency health conditions and health risks, in the same way audit insurance helps the taxpayers to cover the professional costs associated with tax audit. Tax audit is a cumbersome and stressful process that requires the taxpayers to provide lots of information and be present before the ATO for an enquiry. They require the services of many professionals like lawyers, accountants, valuers, actuaries and advisors in order to prepare for the tax audit and present the required information before the tax officials. All of these professionals charge a huge amount of fee and since tax audits are generally long drawn process, the fees runs into thousands of dollars.
Businesses and taxpayers can reduce this financial burden involved in tax audit by buying a tax audit insurance policy to cover all the professional costs. Buying an audit insurance cover is easy as in most cases it is offered by your accountants. The policy covers both the taxpayer and the accountant and helps the accountant to recover his fees from the policy amount thus eliminating the risk of lost hours for the accountant.
ATO scrutiny is increasing every year. Any return is randomly selected for a routine enquiry or a simple typing or calculation mistake might also be called for an enquiry. Businesses with huge volume of cash transactions and complex business structures are also selected for tax audit. Taxpayers with different sources of income and businesses with multiple activities are also routinely called for tax audits. Facing the tax audit requires the services of an accountant and a lawyer to prepare the necessary supportive documentation and to accompany the client to the discussions with ATO. These professionals charge fees by hour and since the process of tax audit stretches to a few months to years, the fees causes a lot of financial burden on the tax payer. In this scenario, tax audit insurance helps the taxpayers to reduce their financial burden.
Buying audit tax audit insurance cover helps the taxpayers to protect themselves from the financial burden caused by tax audit. Audit shield is the best tax audit cover as it is retrospective and covers the previously lodged returns as well. Most of the accountants sell audit shield along with their service package in order to protect themselves and their clients.