An auditor is regarded as the watchdog of the organization. The auditor ensures that every dollar is properly accounted and spent according to the norms of the State. In order to oversee the activities of the various organizations and business enterprises, the Australian Government has authorized the Australian Tax Office (ATO) to conduct an audit of accounts of different organizations and business enterprises. The expenses on such an audit will have to be met by the respective organization or business enterprise. But, the expense of such an audit is considerably higher, which can cut into the profit of the organization. To protect the interests of such organizations, audit insurance or tax investigation insurance cover was established in 2003.
Audit by ATO:
Interestingly, over the years in Australia, there has been a considerable increase in the intensity or frequency of the tax audit by the ATO. More than individuals, the ATO normally would take up tax audit of business enterprises and other organizations with self managed superannuation funds. The ATO takes up this audit after you have filed your accounts and tax returns.
After scrutinizing the accounts and the tax returns that you have filed, the ATO may decide to exclusively conduct an audit of your organization. When the ATO visits your office, you will have to provide all the books of accounts, including vouchers and such other records. At the same time, you will have to bear the expenses on the audit fee which can be comparatively higher. In such cases, taking up the tax investigation insurance cover can be an ideal proposition.
Hire the services of professionals:
It is also possible that you may not be conversant with all the aspects of tax law and other legislations. Therefore, in such cases you will have to hire the services of professionals like the Chartered Accountants and attorneys specialized in the particular branch of law. Now, you will have to pay for the professional services provided by the Chartered Accountants and the Attorneys. Such professional charges can also be considerably higher.
Expenses on review and investigations by an ATO:
During the course of audit, the ATO may conduct enquiries and also hold investigations on various aspects of the self managed superannuation funds in your organization. In many cases, the ATO may also instruct you to review or recast the accounts. All these involve considerable time and for all these, you may have to pay higher charges to the professionals. Here again, you may consider taking up the tax investigation insurance cover to meet such unforeseen expenses.
The insurance cover for tax investigation has come as a boon to many organizations and business enterprises. You may wonder more than 2500 firms in Australia have been benefited by this insurance cover. Some of the insurance companies have introduced comprehensive insurance cover, which includes tax investigation, management liability and also cyber insurance.
Mitigates the unforeseen expenditure:
The premium payable on the insurance depends on various factors like the amount of insurance of cover, type of insurance and so on. However, you may decide about the insurance after consulting your chartered accountant. In any case, the tax investigation insurance is an ideal remedy to mitigate the unforeseen expenditure.