A tax audit insurance is different from a car insurance in such a way that it is not compulsory. You can opt from having a tax audit insurance if you think that you do not need it. However, you never know when you are going to be subjected to a tax enquiry and when that happens, you do not want to be financially caught off guard since the process involves payments and professional fees. Tax insurance is generally offered by accounting firms to their clients. Although tax audit insurance is not mandatory, you will be amazed at its benefits.
By having a tax audit insurance, you can be sure that all the professional fees and other expenses accrued during the process will be covered by the insurance company. The audit will be instigated by the Australian Taxation Office (ATO) or by other concerned government agencies. Reviews can be done on lodged return or compliance obligation. The audit can be done randomly with subjects chosen at random as well or they can be conducted among tax payers or businesses with questionable tax statements or misrepresentations that warrant an enquiry. Although one is not required to have a tax audit insurance, those who are susceptible to audits are advised to have an insurance.
Businesses and commercial establishments
The government can hold random audits among business establishments or firms to ensure tax compliance such as land and payroll tax, fringe benefits tax, workers compensation, goods and services tax, employer obligation and others. The ATO and other government agencies can peruse the company’s tax records, books and other related documents. The process can take days to weeks and it can be time-consuming. To avoid the hassles, it would be suitable for a business or commercial establishment to have a representative who will be represent in their behalf during the enquiry.
Professionals and individuals
Ordinary tax payers are advised to obtain tax audit insurance in order for the person to have an accountant to represent him during the tax inquiry. To obtain a tax audit insurance, consult your accountant so he can coordinate with the tax audit insurance company.