Audit insurance

[Burramys]

My tax agent has contacted me about the increasing frequency of tax audits, which will incur significant costs. The agent has Audit insurance and is recommending Audit Shield for clients. The cost of Audit Shield is $95, and is an allowed deduction. Audit Shield is run by Vero, www.vero.com.au.

An ATO advice sheet cites a focus on unreported cash transactions; business registration; SME reviews and audits; 1000 reviews and audits associated with the sale, transfer and acquisition of property; reviewing tax affairs of over 4300 SMEs re PAYG; and superannuation reviews and audits. In FY13 the ATO will focus on failure to declare all income, property-related tax issues and employers who do not meet superannuation obligations.

Is there a need for such insurance for relatively simple property and share investors, and how much would an audit cost? Any other views on this topic would be valued. TIA.

 

[softmonkey]

My old tax agent has been sending me these letters for a couple of years now (despite the fact I stopped using them well before that).

To me it seems like scaremongering, not to mention dereliction of duty - surely if the agent is doing their job properly your affairs should pass audit anyway.

 

[Aaron_C]

To me it seems like scaremongering, not to mention dereliction of duty - surely if the agent is doing their job properly your affairs should pass audit anyway.

It may pass audit but you still have to pay for the fees to prepare correspondence etc with the ATO. Besides, if the ATO ever wants to find something, they will

 

[coastymike]

Audit Insurance covers you for the costs involved in the agent liaising on your behalf with the ATO in case of an audit. Just because you are audited doesn't mean the agent has done anything wrong and if you think that because you have been audited and the accountant has completed the work that it should be done for free you are as deluded as someone on an LSD trip. It involves extra work and that is what audit insurance is covering the cost of the bill.

It doesn't cover additional taxes paid if something is found during the audit phase and you are denied a deduction.

So it has nothing to do with covering the competence or not of an accountant. Seems like many do not read the documents, throw them out and then make wild claims about how useless it is. If you actually read the stuff you would realise it doesn't cover one dollar of additional taxes at all. It covers the accountants time. If you want to deal with the ATO during audit on your own for free then no problems. If you expect your accountant to do it for free then go back to your hairdresser and ask for a free cut because the hair they cut has now grown back.

 

[AXXO]

My tax agent has contacted me about the increasing frequency of tax audits, which will incur significant costs. The agent has Audit insurance and is recommending Audit Shield for clients. The cost of Audit Shield is $95, and is an allowed deduction. Audit Shield is run by Vero, www.vero.com.au.

An ATO advice sheet cites a focus on unreported cash transactions; business registration; SME reviews and audits; 1000 reviews and audits associated with the sale, transfer and acquisition of property; reviewing tax affairs of over 4300 SMEs re PAYG; and superannuation reviews and audits. In FY13 the ATO will focus on failure to declare all income, property-related tax issues and employers who do not meet superannuation obligations.

Is there a need for such insurance for relatively simple property and share investors, and how much would an audit cost? Any other views on this topic would be valued. TIA.

Audits are definitely on the increase due to more ATO funding for them. Iprided myself in not having one tax audit now I hat 2-3 a year for clients.

 

[jim1964]

. Audit Shield is run by Vero, www.vero.com.au.

I used to have Audit Shield from Vero,$200 per year through my accountant.I think they get a kick back.I couldn't see the value unless you are a high risk cash business,which i was.The average person wouldnt need it,if you are doing the right thing