BUSINESS TAX FACTSHEET
The Australian Tax Office has fundamentally changed the way it looks at business and personal taxpayer compliance.
Gone are the days of extensive audits and visits as many state, federal and territory agencies are able to look at the information you report from a wide array of sources. The ATO in particular has made it very clear to taxpayers that its data mining capabilities are well resourced to look at the information you report versus that held by third parties and whether your information is consistent with industry norms and patterns of behaviour.
Audit insurance covers the cost of professional fees should your business or personal tax affairs be audited by the Australian Tax Office or other Federal, State or Territory agencies. An audit, review or investigation is designed to ensure that you are complying with various tax and legislative requirements such as:
- Income, land and payroll tax
- Goods & Services Tax (GST) and BAC compliance
- Workers Compensation
- Superannuation Guarantee payments and compliance
- Self-managed super funds
- Research and development grants
- Fringe Benefits Tax
- Record keeping
- And any matter where you are compelled to respond.
Each year the ATO announces the areas of tax and compliance that it will be targeting in that year. In recent years, their focus has been on:
- Taxpayers who fail to declare income or make incorrect claims
- Complex business tax structures
- Taxable income reported by wealthy taxpayers
- Tax planning schemes
- Private health insurance rebate claims
- Tax levy exemptions
- Self-managed super funds in particular, loans, related party transactions, SMSFs with a history of non-compliance and incorrect reporting of pension income, tax losses and non-arms length transactions
Business & Employers
- Small business benchmarks and cash economy
- Taxable government grants and payments
- Payments to contractors in the building and construction industry
- PAYG withholding
- Fringe benefits reporting
- Payment of superannuation guarantee
- Misuse of trusts and undeclared income
- Shareholder loans, using business funds & assets for personal purposes
- CGT non disclosure
- GST refund integrity
The ATO in particular has received increased funding for its data matching capabilities and continues to look for inconsistencies in how you report your tax information. If the ATO does identify any consistencies in your tax affairs, you'll be contacted and asked to explain. Provided you're able to clarify your information is accurate, the case is closed and no further steps are needed.
However this process can be a costly one, particularly if you need to engage professional services to assist you to deal with the Tax Office or any other agency looking at whether you or your business has met your compliance obligations.
If your business or individual return is subjected to a random audit, review or investigation, you are responsible for the costs involved in providing the required information. Even the simplest enquiry can require hours of work and more complex cases can incur substantial professional fees to assist you or your business.
Bates Cosgrave offers all of our clients the ability to be insured against an audit. Our Audit Protection Service provides for the payment of professional fees incurred as a result of you being selected for an audit, review or investigation by the ATO or other Government body.
The cost of being properly represented in these matters can be quite considerable depending on the length of time involved. Audit Protection Service provides a fixed, cost effective solution to guard against these unbudgeted costs.
The Audit Protection Service cover is provided by Vero Insurance Limited. Vero is a wholly owned subsidiary of Suncorp Ltd.
The service covers all professional fees up to the prescribed limit (with no excess) when responding to or representing you in a review, audit or investigation. These include not only our fees, but also legal fees, bookkeeping fees and specialist professional advisor fees (e.g. quantity surveyors, valuers, and actuaries).
All of our clients can take advantage of the Audit Protection Service. Different levels of cover are available for:
- Salary and wage earners;
- Businesses or business groups with turnover under $100 million;
- Self managed superannuation funds;
In most cases, individuals and family entities can be covered by the same policy that covers the business entity – for no extra cost.
Yes, a tax deduction can be claimed.
The following are not covered by the Audit Protection Service:
- Audits, reviews or investigations where notification was given prior to the inception of cover or your confirmation of participation;
- Punitive costs such as penalty tax, costs, interests or any fines;
- If the ATO auditor imposes final culpability penalties of 75% or more;
- Failure to produce documentation or furnish information to the Taxation Office or government agency;
- Costs for work incurred which should have been done prior to the audit, review or investigation taking place;
- Mass Marketed Schemes without a product ruling.
Contact us 02 9957 4033 and we will arrange for your cover. Participation in the Audit Protection Service is active the next business day after receipt of payment.
Last updated April 2013. This factsheet is provided for information purposes only and is correct at the time of publishing. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.