MSI Urges TAX AUDIT Insurance

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July 17, 2012
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July 18, 2012

MSI Urges TAX AUDIT Insurance

Premiums for this type of policy can start from as low as $250 per year when purchased as part of your business.

All Australian taxpayers including business have been warned to take out audit insurance as the Australian Tax Office increases its probing of all businesses and citizens who actually pay tax. MSI Global Alliance Australia suggests that taxpayers take out audit insurance to cover themselves against the cost of tax agents and bookkeepers having to put together a case to support tax returns. Australians can expect more scrutiny from the ATO as it increases its data matching capabilities. The legal and accounting group says there is a stronger onus on taxpayers to substantiate their tax returns. In preparation for tax time, MSI suggests that taxpayers maintain proper records, especially of cash transactions.

MSI Global spokesperson Alec Blacklaw said: “Taxpayers should be aware the ATO has far-reaching powers that allow it to access vast pools of external, third-party data.”

This means more reading, checking financial data and decisions taken on what can be afforded out of net income on all citizens.

Mr Blacklaw said: “In the past, the value of this access has been limited by the ATO’s inability to effectively categorise, sort and match this data; however after investing millions of dollars, finally ATO systems are becoming more and more sophisticated.”

“This means the ATO can use complex techniques to match their data with data from other institutions both in Australia and overseas, looking for discrepancies.”

A typical example would be the sale of a property. While the ATO always had the authority to monitor the sale for tax purposes, the difference nowadays is that the ATO is more effective at tracking such a sale and following up with a computer-generated letter. The process requires little human interaction.

“The onus is on the taxpayer to prove what their income is, not for the ATO to disprove,” Alec Blacklaw said.

Taxpayers should also keep detailed records of large transactions that are not taxable, such as overseas transfers or the sale of the family home.

An average audit will cost $5,000 or more in accountants fees. Tax audit insurance can even be extended to cover payroll tax audits, workers compensation audits and other forms of audits conducted by Government departments. VeriSure Insurance Brokers can help you protect against the cost of an audit , which can often be thousands of dollars. We can offer Audit Insurance as part of the business insurance packages that we arrange for our clients, or as stand-alone insurance policies.

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